Shameful

According to news reports today, Senate Democratic leaders are considering allowing a landmark student loan reform bill die. The would-be killers: a handful of Senate Democrats who apparently care more about protecting the subsidies of powerful student loan companies than about helping low-income and working class families afford to send their children to college.

Make no mistake, if this bill dies, the victims will be those students who do not have the financial wherewithal to afford to go to college without the substantial boost in Pell Grants that the legislation promises. Given the mammoth budget deficits this country faces, this just may be the last chance in a long time for Congress to make a significant investment in the program. In fact, if the bill collapses, many Pell Grant recipients may actually see reductions in their grants. Without the mandatory funding that the student loan reform bill provides, it will be extremely difficult for Congress to keep the fiscal year 2010 maximum award of $5,550 in place in the coming years.

Correct us if we are wrong, but aren’t there millions of financially needy students in Arkansas, Delaware, Nebraska, North Dakota, and Virginia – the states the bill’s detractors hail from – who could sorely use the additional Pell Grant funds to make their college dreams come true? Unfortunately, these students and their families can’t afford to hire powerhouse Democratic lobbyists like Tony Podesta and former Deputy Attorney General Jamie Gorelick to press their case on Capitol Hill, as student loan giant Sallie Mae has done. Nor are they able to shower lawmakers with hefty campaign contributions or make sizeable contributions to Members’ personal charities or pet causes.

As my colleague Jason Delisle predicted in January, the main roadblock to reform appears to be Sen. Kent Conrad, the North Dakota Democrat who is in charge of the Senate Budget Committee. Conrad is apparently opposed to using the budget reconciliation process to push through student loan reform because the Congressional Budget Office has recently reduced the amount of savings the government would get from eliminating the Federal Family Education Loan (FFEL) program and moving to 100 percent direct lending (from $87-billion to $67-billion).

Senator Conrad’s objection doesn’t make a lot of sense. Surely, Democratic Congressional leaders can find ways to trim the student loan overhaul bill that the House of Representatives approved last fall. As we have previously said, the House bill is far from perfect – and while a lot of the new spending programs in it are well-meaning, they are hardly essential.

Are other issues at play here? In an interview with The New York Times, Senator Conrad said that he was “strongly supportive of the education package.” But we have trouble believing that. From the start of this debate, the budget committee chairman has expressed strong misgivings about the legislation and how it would affect his friends at the Bank of North Dakota. Whose interests is he really putting first?

The irony in all of this is that a large part of the student loan industry would be better off if this bill passes than if it doesn’t. The end of the FFEL program is coming no matter what happens to the legislation. That’s because an emergency law that is currently propping up FFEL – the Ensuring Continued Access to Student Loans Act – is set to expire in July and neither the Obama administration nor the chairmen of House and Senate education committees have any interest in extending it. The legislation that Rep. George Miller, the California Democrat who leads the House Committee on Education and Labor, contains all sorts of set asides for non-profit lenders and guaranty agencies that would guarantee their survival.

In the end, this isn’t about whether or not FFEL lives or dies. What this really comes down to is whether we want to boost the purchasing power of Pell Grants and keep the doors of college open to millions of low-income and working class students. That’s the question Democratic Senators should be asking themselves.