aTypical Joe: a gay New Yorker living in the rural South

Friday, July 20, 2007

Student loan overhaul passes Senate

WaPo:

The Senate overwhelmingly approved a wide-ranging overhaul of student loan programs early today that would pay for more than $17 billion in grants and other student aid by slashing subsidies to lending companies.

Democrats and student advocates said the legislation, which passed in a 78 to 18 vote, would help millions of Americans pay for college in a time of steady and often steep tuition increases. But lenders and some Republicans said the measure would hurt students by making it unprofitable for many companies to issue such loans.

I haven’t paid near enough attention to the investigations uncovering all kinds of chicanery in the $85 billion-a-year student loan industry but I agree with Kennedy:

“The question is: Are you going to support the students or are you going to support the banks?” Sen. Edward M. Kennedy (D-Mass.), chairman of the education committee, said during debate.

Lending companies said the legislation was a backdoor effort to drive some companies out of business and force borrowers to use a federal program, strongly supported by Democrats, in which the government lends directly to students.

The measure would cut subsidies to lenders by about $18 billion over five years and boost student aid by $17.4 billion during that period, with the rest of the savings used to reduce the federal budget deficit. The biggest aid increase would raise the maximum annual Pell grant, the nation’s main aid program for low-income students, from $4,300 to $5,400 a year by 2012.

So please answer me this: we read hear Republicans claim Democrats are going to force private lenders out of business by loaning directly to students and cutting $18 billion in subsidies. Uh, so the only way they’re in business is with subsidies??? I guess that’s the Republican version of private enterprise.

The way the math reads they cut $18 billion in subsidies, give $17.4 billion to students and use the rest to reduce the debt. That sounds about right to me (and is not contradicted in the story or anywhere else I can find). Of course George Bush promises a veto.