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Student Loan Bill May Become Part of Health Care Package

March 12, 2010

by Agnes Jasinski

To compensate for stalled negotiations on both health care legislation and a bill that would overhaul the country's student loan program and improve college students' access to federal aid, Democratic leaders proposed a solution yesterday that would move both of those hot-button issues forward—combine them, and pass them as one.

Both the comprehensive health care bill, which would guarantee health insurance to 30 million uninsured Americans, and the student loan bill, which would replace private lending with direct lending through the government and increase Pell Grant maximums, have faced opposition as Democrats work to pass both through Congress before the November mid-term elections. To kill two birds with one stone, Democratic legislators proposed bundling the two bills into one last night, not only to give the proposals a better chance at passage, but to keep them alive long enough for a vote by the full Senate and House.

An article in the New York Times yesterday describes the strong support a dual measure already has among the Democrats, suggesting that adding the student loan bill to the more expansive health care legislation would improve the health care bill's chances at passage. (Providing college students with more access to federal aid is undoubtedly more popular and less controversial than crafting a reasonable health care bill.)

The student loan bill had already passed in the House. Recent predictions have the government saving about $67 billion by going to direct lending; that new funding would go toward Pell Grants and other education programs. (A rise in the number of people attending college and seeking aid in the weak economy has raised the projected cost of new Pell Grants to $54 billion from $40 billion, according to the New York Times.) The student loan bill has been a consistent goal of President Obama's, as lenders have come under fire for a lack of oversight,  rising student loan default rates, and contributing to excessive debt among college students. Effectively, the bill would put an end to direct-to-student private loans, which students can borrow without even informing the financial aid office, and which can be taken out for more than the student’s cost of attendance for the academic year.

The private student loan industry has obviously not been very supportive of the bill, and Republicans have questioned whether giving the government control over the student loan industry is really a wise choice.


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