Wells Fargo opposes expanding Pell grants

By Don Clyde
The Guardsman

City College is considering moving away from banking with Wells Fargo because of a statement made by the bank against education reform legislation that would end subsidies to lenders and dramatically increase funding for Pell grants.

Trustee Steve Ngo cited a July 2009 statement to the San Francisco Chronicle in which Wells Fargo said the Student Aid and Fiscal Responsibility Act “will have unintended consequences that are not in the best interest of the students and their families.”

Ngo is drafting a resolution calling for the college to align its banking practices with the district’s commitment to doing business with small business enterprises and small local business enterprises.
“You can’t just brazenly take an anti-student, anti-education stance and just get away with it,” he said.

SAFRA, or House Resolution 3221, would have amounted to about $87 billion in savings over ten years by ending subsidies to banks. About $40 billion of those savings would have then been dedicated to Pell grants through 2019.

The legislation would have also provided billions to community colleges nationwide by funding new, green building projects, and college access and completion programs.

SAFRA passed the House of Representatives in September 2009, but stalled in the Senate. The legislation has since been modified and attached to the massive health care reform legislation passed by the House on March 21.

“I want to make sure that we spend our dollars consistent with our values, and that we bank and do business with people who share our values, and I’m not very encouraged that they do,” Ngo said referring to Wells Fargo.

City College currently maintains an average of $12 million to $17 million in Wells Fargo accounts, Ngo said.

If Ngo’s resolution passes, a “request for proposal” would be issued within 45 days to begin the process of reviewing banks.

Wells Fargo would not comment specifically by phone, but sent an e-mail statement to The Guardsman.

“During this time of uncertainty, when multiple legislative proposals concerning federal student lending are being discussed, we remain committed to serving the financial needs of students and families through responsible lending of student loan products and to our team members who serve these customers,” the statement said.

Rep. George Miller, from the seventh district of California, originally wrote the SAFRA legislation.

“It’s going to strengthen our community college system at a time when community colleges are absorbing a whole new role at training and retraining of not only new students, but of workers returning to put together the skills necessary either to get a new job or to hold on to the job that they have,” Miller said during a news teleconference on March 18.

Ngo’s resolution also calls for the City College Financial Aid Office to fully transition to the Direct Lending Program by this July. Over 2,300 colleges and universities now use direct federal lending, according to Miller.

“Their compliments are high,” Miller said. “They find the program efficient, easy to use and good for their institutions and students.”

City College Dean of Financial Aid Jorge Bell said the college would be ready for a transition to direct lending.

Ngo’s resolution also said Sallie Mae, the largest private U.S. student-loan provider, spent $3.48 million to lobby against SAFRA in 2009.

Sallie Mae will still be allowed to service student loans. Ngo’s resolution requests the Department of Education that Sallie Mae and another lender, Nelnet, not service loans made to students at City College.