Fighting on Two Fronts

"I have to keep reminding myself that he [Bush] was a Republican," said Matthew Park, a securities analyst for Prudential Equity Group in New York.

The student lending industry became a tempting target for cutbacks for philosophical and political reasons. Democrats tend to prefer government solutions -- and eschew for-profit answers -- to societal concerns. Moreover, Sallie Mae and others in the industry had showered mostly Republican lawmakers with campaign contributions, increasing the partisan antipathy.

On top of that, the industry has suffered public gaffes that have made both parties leery of backing it.

Congressional investigators are looking into Sallie Mae Chairman Albert L. Lord's sale of $18.3 million worth of company stock just days before Bush proposed the subsidy cuts that caused Sallie Mae shares to drop. The chairmen of the House Financial Services and Education committees have requested detailed information on all contact between the lending giant and the Bush administration over the previous three months.

Even the senior Republican on the Senate's education committee, Sen. Mike Enzi (R-Wyo.), criticized Lord's transaction. "Regrettably, Sallie Mae officials' recent stock transactions do not reflect the commitment to accountability and corporate governance that we want our children to learn from and follow," Enzi said in a statement.

Joyce, the Sallie Mae spokesman, said that Lord had no knowledge that the administration would propose such cuts and called the timing of the sale "completely coincidental."

The industry also has been bruised by media accounts that some of its lending institutions gave favors to student loan officers to get onto the list of lenders that the colleges recommend, called preferred-lending lists. The New York attorney general's office has made an informal request for information on Sallie Mae's marketing practices related to these lists.

Whatever the cause, Sallie Mae is being forced to push back hard on Capitol Hill, including boosting its campaign giving to Democrats. In the 2004 election, GOP candidates got nearly 60 percent of its donations. But last year, the company divided its political action committee's $589,500 in contributions evenly between Democrats and Republicans.

Sallie Mae recently hired a Democratic lobbyist, Mark Schuermann, a former top aide to ex-Rep. Harold E. Ford Jr. (D-Tenn.), and has widely distributed glowing quotations about the current system from college loan officials from California to Connecticut -- a group that tends to have the sympathy of Democrats.

And it is not lobbying alone. The industry's umbrella organization, America's Student Loan Providers, is considering an advertising campaign and, in the meantime, has been producing a steady stream of news releases and op-eds that extol the private lending program's long history, low costs and relative efficiency. Kevin T. Bruns, the group's executive director, said he has been spending lots of time talking to college newspapers in hopes of producing articles that might incite student support for the program's continuation.

Individual student loan associations have been flying its members into Washington to lobby their elected representatives. Last week, the Education Finance Council, which represents nonprofit student loan providers, brought 25 executives for a day of visits in Congress. The first event: a fundraiser for Rep. Peter Hoekstra (R-Mich.), a member of the House Education and Labor Committee.

James W. Parks II, president of the Louisiana Public Facilities Authority, was one of those lobbyists-for-a-day. He visited his state's congressional delegation and gave them a single message: Tampering with the private loan program "could be disastrous down the line" and that students, not banks, would be harmed in the long run.

The National Council of Higher Education Loan Programs has been encouraging its members to write letters and e-mails to lawmakers and to visit them when they travel back home. The group is planning a session in Washington next month that will include multiple meetings on Capitol Hill. "We definitely have a lot of work to do," said Repp, the group's general counsel.