How Washington tries to strangle even the best ideas - student loan reform

Washington Monthly, Jan-Feb, 1995 by Steven Waldman

The most significant lobbying trend of the nineties, however, is not the revolving door or influence-peddling or the cousins-marrying syndrome. It is organized grassroots lobbying. The phrase conjures images of Ralph Nader interns in cutoffs and solar energy T-shirts pounding on doors during their summer vacations; but in the eighties and nineties, private industry borrowed the techniques pioneered by environmental and public-interest activists to generate massive issue-oriented political campaigns. Even big Washington firms such as Patton, Boggs & Blow and Hill and Knowlton have developed "grassroots capabilities."

Primitive grassroots campaigns involve mobilizing the members of a group, as when the Consumer Bankers Association got banks to write legislators opposing direct lending. But many grassroots campaigns focus on getting credible, disinterested third parties to lobby for the client--a political bank shot. The student-aid industry realized it had little credibility with lawmakers, so the major players had others make their case for them. Who had the most credibility? Financial aid administrators, the grunt-level men and women who actually gave out the aid, dealt with students, and would have to implement a direct lending system. Sallie Mae sent "self-tutorials" to 3,000 schools so that they could estimate how much direct lending would harm their schools. Teams of technical experts visited dozens of schools and held misleading seminars with 1,000 financial aid officers on the effects of direct lending. They whipped out studies they'd done at other schools which--surprise!--determined that colleges would have to hire extra staff, buy computers, open new offices--at an average cost of $219,000 per year.

The blitz worked. On March 24, the Iowa Association of Student Financial Aid Administrators wrote colleagues, urging them to oppose fullblown direct lending. On March 31, the Florida aid officers joined them, and soon so did their colleagues from Kansas. By April 6, the Southern Association of Student Financial Aid Administrators had endorsed a go-slow approach on behalf of officers in nine Southern states. Joe Russo, the financial aid director at the University of Notre Dame, circulated a daunting paper called "Ninetyfive Questions to Help Plan the Direct Loan Program." In many cases, the financial aid administrator at a college opposed full-blown direct lending, while the president of the same school supported it.

What would prompt the lowly financial aid officer to buck the president of his or her own school? College lobbyists grumbled that it was a case of simple corruption: The aid officers had been bought off by Sallie Mae, the guaranty agencies, and the banks, which often helped finance the aid officers' annual conventions. To prove that claim, the lobbyists faxed around leaflets showing that USA Group, the largest guaranty agency, sponsored the "Fiesta of Spicy Cuisine and Mariachi Music" at a San Antonio convention of aid administrators.