School Loan Federalization Complicates Health Care Negotiations

What was Rahm Emanuel meeting to discuss with the Senate Democrats yesterday on health care if abortion language didn't fit into the fix? Student loan reform, which the administration considers a high priority, but which has also generated a fierce behind-the-scenes lobbying battle.

Last week, The Hill reported that seven Senate Democrats -- Sens. Carper, Lincoln, Pryor, Nelson(s), Bayh, and Kaufman -- told the White House that they were wary of pairing the student loan reforms with the health care bill. Today, several members plan to send a letter to Senate Majority Leader Harry Reid expressing concern about the student loan bill, which could threaten the pairing of the two bills. Instead, they want "thoughtful" alternative proposals that won't lose them jobs in their states. Read the letter here.

Two new Democrats are aboard, Virginia's Mark Warner and Jim Webb. Now, nine Democrats are on the record as having expressed objections to the student loan bill. At least six of those nine Democrats are supposedly easy "yes" votes for health reform. The White House and the majority leader may have to extract themselves from this box before moving forward.

Also, opponents of the student bill are concerned that if it's tied to reconciliation there will be no committee markup, no hearings, etc. Why the pairing? Because there's no other way to get it through the Senate without reconciliation -- it doesn't have 60 Senate votes.


Thumbnail photo credit: Mark Wilson/Getty Images

Last fall, the House passed the Student Aid and Fiscal Responsibility Act, which would essentially pulverize the private student loan industry and boost government-backed programs like Pell Grants and direct aid to community colleges. These senators worry about job loss in their states, and they've been financially rewarded by the private student loan industry in the past. The private lenders would still exist, but they'd be disfavored, and the government would stop subsidizing them. According to the CBO, the bill would save the government about $67 billion.

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Marc Ambinder is an Atlantic contributing editor. He is also a senior contributor at Defense One, a contributing editor at GQ, and a regular contributor at The Week.

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