Politics of the Powerful, the Private, and our Poor Students
Exploring the tension between public goods and private impacts
Student loans across the history of higher education have often involved controversial negotiations between invested parties; this portion of the exhibit describes the tension between powerful law-makers, private corporations, and the poor students caught in the middle.
Politics of the Powerful, the Private, and our Poor Students
The establishment of the Texas General Student Loan Corporation (TGSLC) made it possible for students to access higher education in the state of Texas. Acting as a guarantor for student loans, the TGSLC played middle-man between student loans and the banks who funded them. For almost twelve years, the TGSLC reported successful results in its efforts and even saw significant increases in its services. However, federal legislators began to question the relevancy of the program. Before long, the Student Loan Reform Act of 1993 began to take shape. Fighting for its relevancy, the TGSLC repeatedly attempted to convince lawmakers of the importance of allowing the program to persist and for the corporation to continue to act as guarantor of the loans rather than give up control to the federal government. After multiple petitions and no victory in sight, the TGSLC was forced to sunset the project and surrender to the private corporation world. Those who were invested in the project began to work toward a shift from public non-profit to private, non-profit. Eventually, the TGSLC shut down and became Trellis. This exhibit follows the evolution of the TGSLC and the negotiations that took place between the corporation and federal legislators.
Student loans were becoming major headlines in the news with the public calling for student loan reform in Washington D.C. There was talk of a new series of bills that would make the federal government the direct lender for student loans. In Texas, Lt. Gov. Bob Bullock began communicating with Texas congressmen and the Department of Education to urge them to not pass this bill. His contentions were centered around the rights of States to determine student loan funding and the state’s heavy investment in the Texas Guaranteed Loan Corporation through the passage of a bond the previous year. Bullock saw the writing on the wall writing, “the Texas General Student Loan Corporation (TGSLC)...will lose a major portion of its funding and more likely will close its doors.”
Bullock’s fight was in vain. In 1992, Congress reauthorized the Higher Education Act, which added a direct student loan pilot program, as many in Washington saw the current system as burdensome and expensive for the government. When Bill Clinton was elected as president in 1992, he made the overhaul of student financial aid a priority. In 1993, Clinton signed the Student Loan Reform Act of 1993. The goal of the Act was to convert around 60% of student loans into direct loans over the next five years. With the passage of this law, the Texas General Student Loan Corporation (TGSLC) saw the sun setting on its role in student lending.
On December 1, 1994, the Baylor Lariat proudly proclaimed that the Student Loan Reform Act of 1993 was passed. Clinton argued that the passage of this law would “eliminate the middlemen” and “save students, parents, schools, and taxpayers approximately $4.3 billion over five years.” The program was piloted with 104 universities for the 1994-1995 academic year, and eventually, close to 1,400 universities became a part of the direct lending program. As a result, the TGSLC began to repurpose itself in the Texas political landscape. They began to incorporate more research and information gathering to ensure Texas students still had access to higher education.
In 2010, President Barack Obama signed the Health Care and Education Reconciliation Act into law. Through the passage of this law, the federal government became the direct lender for all federal student loans. The passage of this law officially ended the state’s participation in federal student loans and forever changed the student loan industry. Its passage attempted to relieve student loan debt from students, demonstrated in the political cartoon in the The Lariat, though students felt the law did little to ease their stress.
In response to the passage of the Health Care and Education Reconciliation Act, the Texas General Student Loan Corporation (TGSLC) began to reconceptualize their identity beginning with the focus on research and information gathering. In 2013, Governor Rick Perry signed Senate Bill 215 into law, which officially made the TGSLC a private, nonprofit corporation that became the Trellis Company. The Trellis Company was left with a large amount of funding from their previous work in student lending. In 2017, the Trellis Company founded the Trellis Foundation to propel themselves into a non-profit space that leveraged their student lending background into service for the State of Texas. The Trellis Company and Foundation continue to provide services to universities, students, non-profits, and government entities within the State of Texas.