A Wild Ride Ahead

Congress is back from its summer break and that means that we will soon be entering the final act of the drama surrounding President Obama’s plan to eliminate the Federal Family Education Loan (FFEL) program and provide all federal student loans directly from the government. The fate of the President’s proposal will be decided over the next two months.

At Higher Ed Watch, we have never said that achieving this essential goal would be easy. In fact, from the start we warned that the Obama administration and its allies in Congress would face a pitched battle — not only with Republicans but also with entrenched interests in their own party who support the status quo.

So far, progress on legislation enacting the President’s plan has moved surprisingly smoothly. In July, the House of Representatives Committee on Education and Labor approved its version of the bill by a comfortable margin. And despite a massive lobbying effort by the student loan industry, passage of the measure by the House as early as next week seems fairly assured.

The real battle is expected to be in the Senate, where Democrats with ties to student loan companies have expressed misgivings. The Senate Committee on Health, Education, Labor and Pensions has yet to introduce its version of the bill, but must do so by October 15, according to the budget resolution that Congress approved this past spring.

Getting the bill through the Senate was always going to be tough, but the events of the last month — the death of Sen. Edward M. Kennedy, the Massachusetts Democrat who led the Senate Health, Education, Labor and Pensions Committee, and the seeming breakdown of bipartisan negotiations on the health care bill — have made it only that much more difficult.

The loss of Senator Kennedy can not be underestimated. He was not only a master legislator but also the member of Senate and perhaps of all of Congress most dedicated to the cause of student loan reform (with the possible exceptions of Reps. Tom Petri, the Wisconsin Republican, and George Miller, the California Democrat who is chairman of the House education committee). His leadership will sorely be missed.

In addition, the increasingly polarized debate on the President’s top priority — reforming the nation’s health care system — looks like it could complicate the student loan bill’s progress. Democratic Congressional leaders have said that if they can’t reach a bipartisan compromise on a health-care overhaul, they will try to push many of the proposed changes through by using the budget reconciliation process (which prevents bills from being filibustered in the Senate because they require only a simple majority to pass). If this happens, the health care and student loan proposals will be included on the same bill, tying the fate of these two extremely controversial measures together.

At Higher Ed Watch, we remain confident that Congress will approve legislation to dismantle FFEL and provide federal loans entirely through the Direct Student Loan program. But we are also certain that this will come down to the wire and be decided by only a handful of votes.

In other words, hold on to your hats because we are in for a wild ride.