Tuesday, March 23, 2010

Those Sneaky Democrats

Tucked in the health care reform bill passed Sunday evening by the House of Representatives was a measure not in any way connected to health care access. Those sneaky critters in the House approved a measure to cut out the middlemen (i.e., the banksters) from the federal student loan program.

From the Los Angeles Times:

The federal government is moving toward the most sweeping overhaul of college financial aid in decades.

The House of Representatives voted for the measure as part of its passage of healthcare legislation Sunday.

Under the proposal, private lenders would no longer make federally subsidized student loans. Instead, the government would make all such loans itself, instead of only some as it does now.

Eliminating the middleman would save the government an estimated $61 billion over the next decade. About $36 billion of that would be used to increase so-called Pell grants for lower-income students. The legislation also allocates $2.5 billion to historically black colleges, $2 billion to community colleges and at least $10 billion to reduce the federal deficit.
[Emphasis added]

The savings comes from the service contracts paid the banks for making the federally subsidized and guaranteed loans. I guess some in government are finally learning that outsourcing not only doesn't save the taxpayers, it costs a lot more over the long run (something we're discovering with Medicare Advantage as well).

What is especially gratifying is that the money saved is being poured back into education, with a bit set aside to reduce the federal deficit. What's not to like? Well, the banks certainly don't like it, and lobbied hard to defeat the bill and will continue their efforts this week in the Senate which still has to vote on it. Their argument? They will have to layoff people, thereby increasing unemployment. For those unfortunate enough to face that eventuality I would simply suggest that they consider applying for the same job with the government. It's going to need some folks to process those Pell Grant applications.

We're not home free yet on this bill, however. We still have to get the Senate onboard, which, given the nature of the world's most exclusive country club, may not be a walk in the park. A little pressure from constituents, however, just might help.



Blogger Linda said...

Wow! I did not know this. Thanks for pointing it out.

I have to admit I was one who grew weary and faint of heart in the long struggle for health care reform, so I did not read everything.

I am very glad to know this.

6:49 AM  

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