What Happened When I Met With The Obama Administration On Its Student Loan Bailout

by Phil Kerpen, Contributing Author: On Friday I got a chance to sit down with a staffer at the Office of Information and Regulatory Affairs (OIRA) and let her know what I think about the Department of Education’s proposed rule that would discharge billions of dollars of student loans and dump them onto taxpayers. Representatives from the White House and the Education Department called in and I brought allies from several other taxpayer groups with me.

The staffer we met with was very nice and professional and said she has been in meetings on the proposed rule all day – and we were the first and only to speak for the taxpayers who would be left paying for the bailout scheme.

I started by quoting from President Obama’s regulatory review Executive Order 13563 which says “each agency is directed to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.”

The Education Department estimate of their student loan bailout rule fails this standard badly, I said, because their estimate of “$1.997 billion in the lowest impact scenario to $42.698 billion in the highest impact scenario” exhibits a comically arbitrary level of precision to three decimal places and a galling lack of accuracy.

I asked the official we met with if she would hire a contractor to fix her leaky roof if the contractor’s price quote was “$2,000 to $43,000” – or if she might seek a more accurate estimate.

I noted the recent public comments of a former OIRA administrator, Susan Dudley, who said “for rules over a billion, you are supposed to do a rigorous uncertainty analysis” and that the “huge range is a sign that they haven’t done rigorous analysis.”

I pointed out that OIRA’s institutional credibility was on the line, because if they would approve this absurdly inaccurate cost estimate it was hard to see what they would ever reject.

And then I spoke for you, our American Commitment members. I told her you had sent over 4,000 comments to the Education Department and 20,000 letters to Congress to stop the rule.

I read some of the eloquent comments you emailed to me ahead of the meeting, specifically Christina Clark, who said the bailout rule “makes an absolute mockery of my and many others’ significant financial sacrifices to gain an education and will only contribute to higher levels of irresponsible spending as students anticipate no future responsibility to pay their debts themselves.”

I asked them this question from Ron Hannan: “How is this fair to those of us who have paid to put our kids through college without any breaks of any kind? Why should people now get a free ride at my expense as a taxpayer?”

The nice staffer sat there and she said nothing. I followed up:

“What should I tell my members who work hard, play by the rules, pay their own loans – or in many cases never had a chance to go to college at all – when they ask why they should be on the hook for these bad loans?”

Again, she said nothing. The staffers from the White House and the Education Department on the phone said nothing.

I said: “I hope you can answer the question, because I really would like to know what to tell my members.”

The OIRA staffer finally replied: “I’m just here to listen.”

Well, I hope she did listen. To me and to all of you who have taken time to weigh in on this issue.

But I fear Susan Dudley, the former OIRA administrator who slammed the lack of rigorous analysis, was right when she went on to say: “When the president’s priorities and good government analysis conflict, most of the time the president’s priorities will win.”

There isn’t much time left because the Education Department will finalize the rule and set the bailout in place as soon as OIRA gives it a stamp of approval – which I think, despite our best efforts, is still likely.

So it’s now more crucial than ever that we keep the pressure on Congress to actively block this bailout.”

If you haven’t done so yet, please click here now to send a letter to Congress. If you already have, please forward this message along to a couple of likem inded people who can join this effort.
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Phil Kerpen is president of American Commitment. Follow him at (@kerpen) and on Facebook. He is a contributing author at the ARRA News Service.

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