Big Money On Campus
In the multibillion-dollar world of student loans, big lenders are finding new ways to drain Uncle Sam's coffers
POLITICAL CONTRIBUTIONS
In hundreds of thousands of dollars
[Complete chart data are not available.]
[labels]
Election cycles PAC donations "Soft money"
1998 $158,311 $56,000
2000
2002 $626,761 $552,000
LOBBYING EXPENDITURES
In millions of dollars
[labels]
1997 $1.6 million
1998 $3.4 million
1999
2000
2001
2002 $2.5 million
Center for Responsive Politics; U.S. Senate
Turning Schools Into Banks
More and more schools are entering into "school as lender" deals with student loan companies. Universities are enticed by the guaranteed profits the program promises; lenders find the program worth their while because it helps them land exclusive deals with the colleges.
Step 1 A bank or student loan company gives a university a line of credit.
Step 2 The school uses the line of credit to make loans to graduate students.
Step 3 Within months, the university sells the loans back to the company.
Step 4 The school pockets a premium as profit.
[Drawing labels]
Line of credit
Student loan
The profit
Sells loans back to company
Rod Little--USN&WR
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