Student Loan Bill a Lukewarm Victory for Dems


Published: April 1, 2010

March 21 was no ordinary Sunday. Most of us breathed a sigh of relief to learn that we’ll be able to stay on our parents’ health care plans until we’re 26. I found out that, by the time I do get kicked off my parents’ plan, I won’t get turned down for coverage because of my pre-existing condition. But there was a lesser-known cause for celebration amongst college students on the day the House passed health care reform: as it turns out, there was a pretty hefty student loan reform bill attached to it.

Amidst their incessant bleating over the evils of the health care bill and its ushering in of Armageddon (see also: Republican National Committee Chairman Michael Steele), the capitalist pigs on Capitol Hill and in the media have remained relatively silent on the issue of student loan reform. This is strange, considering the fact that the bill eliminates federal subsidies to private banks that act as intermediaries in distributing student loans. Instead, federal loans will be administered through an expanded, government-run direct loaning program and students will receive the loans through their colleges’ financial aid offices. The $68 billion that the government will save by not throwing it away on banks will be reallocated toward increasing Pell grants, which provide need-based aid to low-income students.

Oh, the unapologetic “socialism” of it all.  It seems that either the G.O.P. for some reason considers a college education more worth their tax dollars than good health, or the right is just too darn downtrodden to take on another assault on its beloved banks. Unfortunately, there is another possible reason for the student loan bill’s lack of commotion: it’s not really as progressive as it seems.

Although the elimination of private middlemen in the student loan process is a commendable step, it certainly appears more momentous than it actually is. The money saved in this way is only enough to increase the maximum Pell grant amount by about $600 over the next ten years. This is a full thousand less than the President had aimed for in his original proposal. Despite the fact that this increase is designed to keep up with inflation rates, it does not take into account the fact that tuition inflation is even steeper. Financial aid experts have criticized the Pell grant increases for not being substantial enough in the face of university tuition rates that increase multiple percentage points each year.

There are two main problems with this bill. First, it is impossible to keep up with rapidly escalating college price tags just by taking banks out of the picture. While $68 billion is a lot of money, it’s not enough to keep Pell grants at a respectable standard of efficacy. By 2020, the grant maximum should hover at around $5900—barely a dent in the cost of universities like Fordham, whose current price is over $50 grand, now, in 2010. Insufficient Pell grants will make it increasingly difficult for low-income students to attend top universities in the U.S., whose price increases show no signs of slacking.

The larger problem, however, is that this bill does nothing to address the real issue: that colleges are just too expensive. If tuition weren’t increasing at astronomical rates to begin with, perhaps keeping Pell grants up with general inflation rates would be sufficient. Upping federal student loans by meager amounts is nothing more than a Band-Aid on the gaping wound of unchecked increases in college tuition rates. In fact, it seems that, by passing this bill, Congress is tacitly admitting that it is becoming harder and harder for low-income students to afford higher education, yet they refuse to take any action to get at the cause of the difficulty.

While this bill may seem on the surface like a victory for progressives, it is in fact still hampered by conservative values that keep it from making the kind of reform that is necessary to make higher education more accessible to students of all socio-economic levels. After successfully pushing a “government takeover” of health care through Capitol Hill, perhaps the Democrats were afraid to push their luck in the education sector. The intentions of the bill are noble, and it is certainly better than nothing, but in the face of a groundbreaking health care reform that will undoubtedly transform the course of U.S. history, the student loan reform’s lukewarm changes are disappointing. America might be a healthier country in the future, but as it stands now, it won’t be much smarter.