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Doing Health Care and Student Loan Reform Together

March 9, 2010 - by Donny Shaw

Sources are telling The Hill that the Democrats have decided to add a bill to eliminate government subsidies to student loan companies to the budget reconciliation bill that will iron out the differences between the Senate and House health care bills.

Senate Democratic leaders have decided to pair an overhaul of federal student lending with healthcare reform, according to a Democratic official familiar with negotiations.

“It’s going in,” said the Democratic source, in reference to the student lending measure.

In fact, it’s likely that the student loan bill will become the legislative vehicle for the health care budget reconciliation sidecar. That is, Obama’s proposed package of health care compromises will likely be added to the student loan bill and then brought to both chambers for passage under budget reconciliation rules.

The student loan bill is H.R. 3221, commonly known as the “Student Aid and Fiscal Responsibility Act of 2009.” It would save the government $67 billion (.pdf) over the next ten years, and $40 billion of that would go back to students in the form of increased Pell grant funding. Some the rest of the savings would be given to community colleges and early-childhood programs.

It passed the House in September on a mostly party-line vote, but pressure from the student loan industry has caused it to stall in the Senate. Adding it to the budget reconciliation bill is seen as the Democrats’ only chance at overcoming the industry-led opposition, which is being championed in Congress by Republicans, moderate Democrats and Democrats from states that house major student loan companies. But if opposition to it ends up threatening health care reform, it will certainly be dropped.

When the House passed the student loan bill, four Democrats voted “no.” Three of them also voted against the health care bill, but one of them, Rep. Paul Kanjorski [D, PA-11], voted for the health care bill. At the time, Kanjorski argued that private competition in the government-backed federal loan industry helped to reduce costs and improve services, and that the bill would cost jobs in his district, which houses a large lending division of Sallie Mae. If these objections outweigh his support for health care reform, the Democrats will have to drop the student loan bill, since health care is likely to come to down to a single vote in the House.

Image from March 4 S.F. state education protest from Steve Rhodes used under a CC license.

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