Student Loan Reform Tied to Health Care

Flickr/ <a href="http://www.flickr.com/photos/amagill/3367543296/">AMagill</a> (Creative Commons)

Fight disinformation. Get a daily recap of the facts that matter. Sign up for the free Mother Jones newsletter.


The House won’t just be voting on health care this weekend. Packaged with it is a bill that cuts funding for private college loan lenders and redirects the billions saved to cash-strapped students.

If it’s successful, the reforms will end a program started 50 years ago whereby banks receive government subsidies to lend students money for college. The federal government, meanwhile, assumes nearly all the risk of default. Thanks to the recession, that default rate has continued to rise. Under the new plan, the government will loan to student borrowers directly, a policy already in place at more than 2,000 colleges.

The money saved will finance a $36 billion expansion of the federal Pell Grant program. Each student who qualifies currently receives $5,550, but that number will increase to nearly $6,000 with the infusion of this new funding. And private finance companies will stop profiting off the loans because they will no longer be getting big government subsidies.

“This legislation offers the most sweeping changes to the federal student loan program in a generation,” California Representative and House Education and Labor Committee Chairman George Miller said in a statement. “This is really about making a simple choice. Congress can either continue the longstanding boondoggle that rewards banks with tens of billions of dollars in subsidies at the expense of families and taxpayers—or we can invest that money directly in students and America’s world economic leadership.”

In a conference call with reporters yesterday Iowa Senator Tom Harkin confirmed that the student loan reform was packaged with health care reform at the last minute to help it meet the cost-savings requirements of reconciliation, the legislative procedure House Speaker Nancy Pelosi is using to get the Senate’s version through the House. Pelsosi decided on reconciliation after floating the unpopular notion of “deem and pass,” which Nick Baumann and Kevin Drum reported on earlier this week.

HERE ARE THE FACTS:

Our fall fundraising drive is off to a rough start, and we very much need to raise $250,000 in the next couple of weeks. If you value the journalism you get from Mother Jones, please help us do it with a donation today.

As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

payment methods

ONE MORE QUICK THING:

Our fall fundraising drive is off to a rough start, and we very much need to raise $250,000 in the next couple of weeks. If you value the journalism you get from Mother Jones, please help us do it with a donation today.

As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate