With all the fuss over the signed, sealed, and (almost) delivered health
care bill, a key part of the legislation has been overlooked: the
student loan reform. What student loan reform? In fact, there's a
significant portion of the massive bill devoted to this non-health care
subject. So why is it there, and what is in it? Conservatives like Michelle Malkin
are calling it a "nationalization power grab," but is that accurate?
- There's a Lot Less than There Could've Been Inside Higher Ed's Doug Lederman says a fair amount of the loan reform Democrats had planned wound up getting chucked:
the end, to satisfy budget requirements and win over skeptical deficit
hawks in their own party, Democratic leaders wound up directing a total
of $19 billion (of the $61 billion in revenues that the student loan
shift would produce over 10 years) to reduce the deficit and help pay
for the health care portion of the legislation.
- Of Course: Because Loan Reform Was Just a Budget Gimmick, writes the Washington Examiner Timothy Carney.
The idea, he argues, was for Democrats to "[nationalize] an industry
and [fold] its profits into the budget, thus partly paying for some
radical expansion of government--health care reform in this case."
- Don't Listen to the 'Government Takeover' Story Donald Marron,
economics consultant, contends that federal takeover of the student
loan market really happened--in large part--quite a while ago. The
government already "establishes who can qualify for these loans, what
interest rates they will pay, and what interest rates the lenders will
receive. And the government guarantees the lenders against almost all
default risks." All this bill does is, he explains, is "[take] this a
step further and [cut] back on the role of private firms in the
origination of these loans." Reihan Salam of the conservative National Review gives this take his stamp of approval, calling it "balanced and thoughtful."
- Who It Helps, Who It Doesn't Doug Lederman,
following up on his earlier post with a look at the final draft, compiles a
student loan scorecard. The Obama folks, he says, " met ... their two
biggest goals... : bringing all federal student lending (and the
revenues it generates) under their control and using some of the
projected savings to invest heavily in the Pell Grant Program to help
needy students." Pell Grant students, "historically black and other
minority colleges," and private colleges are the big beneficiaries of
the final version of the legislation. Private sector lenders are among
those losing out. Meanwhile, he says, the bill "has little to no direct implication for student borrowers," and is a "mixed bag" for community colleges as well.
- The Changes You'll See Politics Daily's Patricia Murphy outlines how
the legislation will affect students starting July 1. The Pell Grant
system will remain solvent, she says, while students repaying loans
will have a better "customer experience." Pre-existing loans will
remain unchanged, as will private loans.
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