Count me with Tim Ranzetta — student loan reform was D-E-A-D dead earlier this week, as both Congress and the White House were nervous about losing on the health care bill if student lending was included in reconciliation.
But last night, Conrad backtracked from the position he’d expressed only that morning. And today, it was announced that student loan reform will be included in reconciliation.
Tremendous thanks to everyone who signed the petition, made phone calls and other noise about making sure education didn’t get kicked to the curb for another year because Ben Nelson’s biggest donor is Nelnet. And to Meteor Blades, who wrote a diary making it very clear that SAFRA is not only one of President Obama’s very best ideas, it’s also a no-brainer for Congress right now.
But the battle is not over. When SAFRA was scored by the CBO last year, savings were calculated at $87 billion. On March 5, however, they released a new score, saying the bill will only save $67 billion (PDF). George Miller and Conrad got in a huge fight earlier this week, as Miller wanted to use the earlier CBO score, and Conrad the latter. Conrad evidently won, which means that $20 billion has to be carved out of the bill.
The Washington Post is reporting that the figure changed because so many schools have already switched to direct lending, anticipating the passage of SAFRA, so the “savings” will now be less. In addition, enrollment has exploded in the wake of high unemployment and so cost estimates are higher. It’s not clear from looking at the rather opaque explanation from Doug Elmendorf what the CBO’s assumptions were. We’re looking over the numbers and trying to decipher what happened.
Lobbyists for the Wall Street banks who still want their carve-out are hailing the new CBO number, as if somehow paying a bunch of unnecessary middlemen huge fees to do something that nobody needs them to do will somehow make the situation better. In fact, their “compromise” addresses nothing that’s being discussed, and just insures that loans travel through their hands for 100 days before they offload them to the federal government so they can tack on huge, unnecessary fees.
I suppose this makes sense to someone. But the New York Times is reporting that ex-Clinton aides at the Glover Park Group are “aggressively at work fighting the president’s proposal on behalf of an unnamed client,” so clearly the logic will be backed with the cash.
Back on planet earth, Ranzetta points out that if Conrad doesn’t back down, what would happen to the current bill in a “slimmed down” version?
- Will it reduce the deficit by $10 billion as the other bill did (based on CBO scoring)?
- Will it reduce the income-based repayment percentages from 15% (current) to 10% as proposed by Obama?
- Does it incorporate the debt swap proposal to allow private loan borrowers to swap into federal loans if they have federal debt capacity available?
Decisions about these and other issues will determine whether the lobbyists get bought off, or students reap the benefits of the savings. We’ll be working with other organizations to follow it closely and insist that the money goes to students, not banks.
Courtney Ross of AAUW has more on SAFRA at the Seminal.