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Elizabeth Warren Faces Right-Wing Stooge: Here’s Who’s Quietly Funding Her Top Critic

Who's paying Matthew Chingos of Brookings to criticize the senator's student loan plan?
 
 
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Photo Credit: Edward Kimmel/Flickr

 
 
 
 
Today, the Senate votes on Elizabeth Warren’s bill to  refinance previously issued student loans to current rates, which would save borrowers $55 billion over 10 years. The bill is designed to play up a contrast between the two parties on student aid; it’s not going to pass. And ultimately we need to give young people a free or near-free public option for higher education, rather than modestly subsidize the indebtedness that causes delays in major purchases and harm to the economy. But you could certainly do worse than reducing the  massive amount of money the government makes off student borrowers (and I don’t think you have to pay for it; an investment in higher ed pays off itself in the long run).
 
That’s not how Matthew Chingos of the Brookings Institution sees it. Since Sen. Warren entered public office last year, Chingos has been one of her most persistent critics on higher education issues, calling her proposals “embarrassingly bad” and “not as progressive as it seems.” Chingos, with his affiliation with a centrist think tank, often gets cited in the media as an objective source in the student loan debate.

However, it’s always worth following the money. And Chingos gives you that road map at  his own website, where he lists eight research grants he has received, totaling $1.34 million in all, from several conservative organizations. This includes $500,000 from the Lumina Foundation, which has close ties to Sallie Mae, the corporation that stands to lose the most from Sen. Warren’s refinancing bill.

These don’t automatically disqualify Chingos from having views on higher education, but they should inform the debate. Media outlets that freely quote Chingos should disclose his ties to right-wing foundations instead of allowing him to escape with the façade of an objective profile at the Brookings Institution.

Chingos and his colleague Beth Akers began their attacks on Warren  last year, when they fulminated against her proposal to temporarily reduce student loan rates to 0.75 percent, the same rate big banks get from the government. The parallel to bank lending was simply meant as a comparison to show what we prioritize in America, but Chingos, like other critics, took it literally, saying that Warren’s  “embarrassingly bad proposal … confuses market interest rates on long-term loans with the Federal Reserve’s discount window.” He added that Warren “does not reflect the administrative costs and default risk that increase the costs of the federal student loan program,” which is more a budgetary issue than a higher education one. Chingos and Akers’ disparagement got picked up by the  Boston Globe,National Review, t he New Republic and New York magazine, always cited to “researchers at the Brookings Institution.”

With this year’s proposal on refinancing prior student loans, Chingos and Akers were at it again. In March, they  argued that the plan turns student loans into an entitlement, allowing for refinancing at “below-market rates.” That’s an odd way of putting it, because the refinancing would actually peg to the agreed-upon 3.86 percent interest rate for this year. And once again, the focus is on cost, hinting at a  long-standing debate over how much the government makes off student loans.

The Congressional Budget Office projects hundreds of billions in profits to the government, but conservatives object to this, favoring a “fair value accounting” method that they claim includes the risk attached to the loans. But the  Center for American Progress and former CBO director Robert Reischauer disagree, saying that fair value accounting adds phantom costs that never materialize, and that the government actually prices risk quite well (especially when you consider that borrowers can  basically not escape student loan debt).

 
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