Friday, March 12, 2010

Student Loan Initiative Added to Health-Care Reform

Key Senators Balk at Adding Student Loan Overhaul to Health-Care Legislation: The Washington Post; Student Loan Overhaul Taking Filibuster-Proof Route to Overcome Corporate Opposition: The Huffington Post; Deal Gives New Life to Overhaul Student Loans: New York Times; Democrats Pare Differences Over Health Overhaul: Yahoo News.

Democratic leaders in Congress decided Thursday to entertain a deal that would bundle the health-care reform bill with a popular proposal to overhaul the student loan system. Pressure for the deal has come from House leaders and members of the Obama Administration, who are anxious to see the success of two of their biggest political agendas. That said, opposition for the deal has come from key democratic senators who suspect pooling the two agendas could jeopardize the health-care bill’s success.

The success of the health-care reform bill has been long-awaited by many Democrats in Congress. The Bill has been the top priority of the Obama Administration since his presidential campaign began. The bill to reform health-care looked as though it would pass through the Senate in January, but was objected to by Republicans through the filibuster process, preventing the bill from passage. Since that time, Democrats have come up with a plan to revive the bill by passing two separate health-care bills. This strategy will be filibuster-proof and will be part of the expedited budget reconciliation bill. For the bill to pass it will need 50 votes and Senate Democrats control 59. The addition of student loan reform is set to be added to the second of these and democratic leaders are hopeful both will pass in a matter of days. Due to anticipation of the bill’s success, President Obama has elected to put off a business trip to Indonesia, and will also be returning from that trip at an earlier date.

Student loan reform was adopted by the House last September in The Student Aid and Fiscal Responsibility Act. The Act provides for a $5,500 per student increase in Pell Grants per year and the minimization of the private sector’s role in student aid, ending government payments to private lenders and allowing the government to use that money to fund students directly. Pell Grants fund nearly 8 million of the lowest income college students in the nation. The bill would redirect billions of dollars to the Pell Grant fund. Private banks have been very opposed to the bill, with lobbyists making a concerted effort on Thursday to stop the loan reform from being added to the budget reconciliation bill.

Discussion Questions:
1. Was there a benefit to private sector involvement in the student loan program? What was the sense in government funding of private loan companies?

2. Another aspect of the bill is that the Pell Grant will automatically increase with inflation each year instead of being recalculated by Congress. Will this shelter the Pell Grant from budget cuts?

3. Will the addition of student loan reform to the health-care initiative scare off too many Democrats whose campaigns are substantially supported by large corporate entities? Could the bundling prove to hurt both initiatives?

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