All This and College Loans Too

| Thu Mar. 25, 2010 10:56 PM EDT

The House passed the final component of Affordacare1 tonight. Yawn. So what has Congress done for me lately, anyway?

Oh yeah, this:

Ending one of the fiercest lobbying fights in Washington, Congress voted Thursday to force commercial banks out of the federal student loan market, cutting off billions of dollars in profits in a sweeping restructuring of financial-aid programs and redirecting most of the money to new education initiatives.

....Since the bank-based loan program began in 1965, commercial banks like Sallie Mae and Nelnet have received guaranteed federal subsidies to lend money to students, with the government assuming nearly all the risk. Democrats have long denounced the program, saying it fattened the bottom line for banks at the expense of students and taxpayers.

This is, to coin a phrase, sort of a big effin deal. The student loan program has been a disgrace for a long time, essentially insuring a fat stream of profits to banks by allowing them to make risk-free loans thanks to guarantees from Uncle Sam. It was a pretty nice racket while it lasted. Republicans, of course, denounced the end of this gravy train, demonstrating once again, as Bruce Bartlett said a few years ago, that they are "incapable of telling the difference between being pro-business and being for the free market."

Bottom line: if the taxpayer are taking the risk, then the taxpayers ought to get the profit too. Now they do, and it's going to be used to expand access to college for low and middle income students. It's a reform that's long overdue.

1aka the Patient Protection and Affordable Care Act of 2010 aka the Affordable Care Act aka ACA

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