Student Loan Reformation

On March 30, 2010, the famous Reconciliation Bill was passed through Congress. Not only did it include the obvious revisions, or rather, the complete turnover of our former healthcare system, but it also included a student loan takeover proposal. This education loan proposal is something Democrats have been trying to push for a very long time and takes the 2,000 student lenders across the country that are making student loans, pulls them all in, and creates four federal loan centers. As a result, students will have no choice but to go through the federal government to obtain their loans. 

The Democrats bundled the bill into a package along with the Democratic Health Care legislation, which would allow for both measures to be passed by the Senate on a simple majority vote. Without the deal, the student loans bill would be unlikely to pass because it lacked the votes necessary to overcome a filibuster. Packaging the two bills together secured the votes needed on both healthcare and student loans. However, the American public is paying attention because these issues matter to them greatly. They are starting to realize that they don’t like the “shady” way the government is going about their business, and all the special deals just add fuel to that. Approval ratings are dropping because people are becoming more disillusioned and cynical about the way things are happening in Washington. 

What Republicans opposing the bill found was that it took money out of the student loan program and used it to help pay for healthcare. Therefore, students are going to pay even higher interest rates on their student loans in order to help finance the new healthcare entitlement expansion. Should students really be paying for their neighbor’s medical cost because of a sheltered act by Congress of pushing these two unrelated issues together? 

What is really mind-boggling about this whole Reconciliation Bill is the fact that student loans are included at all! The logical mind would see that they are in no way related; but of course, doing this has some sort of importance in pushing forward the Democratic agenda. This loan proposal has now been sent back to the House where Republicans offered 35-40 amendments, all of which failed. They did, however, raise two points of order that succeeded, so it is required to go back through the House where it will be acted on once again. 

But the Democrats once again, have sacrificed big government for jobs, while this program will take 30-35 thousand jobs out of the private sector, killing many of the jobs, and bringing the remaining into the government arena. The way the Democrats constructed this process was very unprecedented and sneaky. Government has a responsibility to be transparent when it comes to people’s tax dollars. What they are doing with the healthcare bill is anything but transparent. Senator Thune states, “This is a budget buster that is going to explode because of all the ‘gimmicks’ they have been using to understate its TRUE cost.”

Not only does the does the bill nationalize student loans, giving students no choice other than turning to the federal government for educational aid, but it favors in choosing which institutions receive excess grant money and government aid. Section 2104 of the Reconciliation Bill is named “Investment in Historically Black Colleges and Universities and Minority Serving Institutions.” This includes programs that help “low-income” students attain degrees in the fields of science, technology, engineering or mathematics by the following annual amounts: $100 million to Hispanic serving institutions, $85 million to historically black colleges and universities, $15 million to Alaska, Hawaiian Native institutions, $5 million to Asian American and Pacific Islander institutions, and $5 million to Native American non-tribal serving institutions. Not only does this not seem to fit with the “healthcare” reform bill, it doesn’t seem fair, in any way, to non-minority students. 

Another farce in the bill is the absence of the “Doctor Fix.” Under current law, Medicare’s payment rates for physicians’ services will be reduced by about 21 percent during the month of April 2010 and by an average of about 2 percent per year for the rest of the decade. H.R. 3961 would increase those payment rates by about 1.2 percent in 2010 and would restructure the sustainable growth rate mechanism beginning in 2011. Those changes would result in significantly higher payment rates for physicians than those that would result under current law. Enacting this part of the bill would cost about $208 billion over the 2011-2019 period. Physicians who go through all of the required schooling and normally come out with thousands of dollars in debt deserve this compensation, right?

However, including the “Doctor Fix” in the healthcare bill would have put it out of balance and puts the bill in deficit. So the Democrats have said (with a wink and a nod), “we’ll take care of it later.” So, instead, they included the student loans proposal, which actually helps pay for the healthcare program, despite the irrelevancy. Senate Democrats said that they could lose some votes as a result of the packaging but did not think it would swing the outcome—Senate Democrats nominally control 59 votes, and only need 50 to approve the reconciliation measure because they knew Vice President Biden would break the tie. In the end, to satisfy the budget requirement and win over the skeptics in their own party, Democratic leaders wound up directing a total of $19 billion (of the $61 billion in revenues the student loan shift would produce over 10 years) to reduce the deficit and pay for the legislative portion of the deficit. 

The American public is frustrated with the government’s lack of transparency and shady, not to mention unconventional, methods of sliding bills through the process without a proper acknowledgment of what jobs it may obliterate, what the people will have to pay to finance these bills, and most importantly, what the people want. The conglomeration of the student loan reformation and the healthcare bill is a perfect example of the tireless attempts to expand government control and regulation and infringe upon the liberties of the American people, especially college students in this case, to make their own personal financial decisions.