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Students talk with Duncan about Sallie Mae, loan debt

U.S. Secretary of Education Arne Duncan sat down with a group of 20 undergraduate and graduate students on May 9 to discuss student loan debt and the department's problematic relationship with the largest private education lender—and profiteer—in the market, Sallie Mae. Duncan agreed to meet with the students after more than 200 students who were in Washington, D.C., for the United States Student Association's annual legislative meeting March 22 converged outside the Department of Education and demanded to be heard. (See related story.)

Before the meeting, the students tallied how much collective debt they brought to the table, says Katie Walkiewicz, a former co-president of the Graduate Employees' Organization at the University of Illinois, Urbana-Champaign, who also serves on the AFT Higher Education program and policy council. The total was more than $600,000 in loans. "We are concerned that the $1 trillion student loan bubble is the next housing-type disaster for the country," she says.

Students who met with Arne Duncan

The students had three "asks" for the secretary, all of them focused on the department's relationship with Sallie Mae. The first: Cut the department's contract with Sallie Mae, or, in lieu of that, change the criteria for department servicers so they are not rewarded when students default—a source of profit for Sallie Mae. The students cited many problems with Sallie Mae loans, including that the private loans don't have income-contingent repayment options or refinancing opportunities, as federal loans do. They noted a recent report from the Consumer Financial Protection Board that out of the 3,700 public comments it received, nearly half implicated Sallie Mae.

Second, the students asked Duncan to publicly call on Sallie Mae CEO Albert Lord to meet with students, instead of harassing them and calling in police and K-9 units to arrest them. (See related story.)

Finally, the student representatives asked for a clarification in the terms of the relationship the department has with organizations like Building Hope, an umbrella group that funds facility improvements for charter schools. Recently, one such school, the Cesar Chavez Public Charter School in Washington, D.C., for which Lord serves as chairman of the board, reached a settlement with a teacher it fired after he and others tried to organize a union.

It was a "surprisingly amicable meeting," says Walkiewicz. Duncan listened as the students shared their stories of hard work and sacrifice to attend college, and described the level of debt they and other students were carrying away with their diplomas.

The secretary asked the students to submit recommendations for rewriting the servicing criteria for lenders in the private loan program, due to expire next summer. He was very concerned about the department not supporting illegal activity and asked the students to address the DOE inspector general. He agreed to let Sallie Mae know he had spoken with the students. And he urged the students to hold him accountable on these matters. "Duncan told us, 'We want to do the right thing here. We take this very seriously,' " says Walkiewicz. Read her description and those of the other students on the website of the Student Labor Action Project, which helped coordinate the meeting. [Barbara McKenna/photo by Chris Goff]

May 14, 2013