MN-02 : Kline Job Loss Claim Refuted

ADAGE : Lying destroys trust. It doesn’t matter how small the lie is … a Lie is a Lie is a Lie is a Lie. Be warned, a person who will lie about the small things will also lie about the big things.

During the Healthcare reform debate, John Kline (R-MN-02) was fond of repeating a Lewin Group analysis that projected horrible things … he continued to repeat those claims long after Lewin had revised them acknowledging that their analysis was not current. Nor did Mr. Kline ever mention that Lewin Group is a subsidiary of UnitedHealth Group, which also offers private health insurance. Fortunately, the Annenberg Public Policy Center of the University of Pennsylvania did a little Fact Checking and eventually these claims were publicized as misleading.


Well, Mr. Kline is at it again … repeating results of a survey of trade groups that represent lenders in the student loan industry. Mr. Kline issued a press release complaining of the government takeover of the student lending “By replacing a popular student loan model with yet another one-size-fits-all government bureaucracy, the bill sacrifices innovation and competition in student financial assistance while eliminating an estimated 30,000 jobs.

WOW … 30,000 jobs …. REALLY … 30,000 jobs ?

Well, time will tell if that is correct, but before I would ever make a claim like that I would want to review the data. Unfortunately, the survey conducted last year by the National Council of Higher Education Loan Programs, the Consumer Bankers Association, the Education Finance Council and the Student Loan Servicing Alliance is not available … that should be a Red Flag warning to an elected official to avoid making such claims.
Worse yet, a January 22,2010 press release from the America’s Student Loan Providers states “An estimated 35,000 men and women are employed nationwide by organizations that participate in the Federal Family Education Loan (FFEL) Program, according to a survey conducted by the National Council of Higher Education Loan Programs, the Consumer Bankers Association, the Education Finance Council and the Student Loan Servicing Alliance.”
So in essence, what they are saying is not that jobs will be lost but that the entire industry will shutdown.

Fortunately, once again a little Fact Checking tells a different story.
“100 percent of the loans originated by the government would be serviced by the private sector under competitively bid contracts. The industry would also continue to service about $500 billion in outstanding student loans. Some or all of the people now servicing loans would very likely be doing the same work under a new system.”

In fact, it is just as likely that the legislation will create US jobs as jobs will repatriated to the U.S. that are currently located offshore. Last year, for example, Sallie Mae said it would cut 2,000 jobs in India and the Philippines and hire workers in the U.S. for those positions. According to the Department of Education, servicing the federal loans is "expected" to be done in the U.S. because of stringent security requirements, including background checks for employees.

Mr. Kline also fails to mention that the legislation has a positive impact for the taxpayers as the Congressional Budget Office estimates that by cutting out the middle man and making all the loans directly, taxpayers would save over $60 Billion over 10 years.

Now, I am not calling Mr. Kline a liar, but I sure wish he would do a little Fact Checking before sending out press releases. His press release was issued six days after the Fact Check report was issued.

But I am calling for Mr. Kline to address what he can do to help create jobs in the Second District.