In the span of a week, the student loan reform bill (commonly known as SAFRA) was alive, then nearly killed, and then quickly revived. Credit’s being given to folks around the country who jammed their senators’ phone lines and put pressure on our elected officials to make sure that student loan reform passes. But it’s Monday, and oh, what a difference a weekend makes. It’s showdown week, again, for SAFRA and plenty is being cut from the bill. On the chopping block is $12 billion over ten years that was slated for community colleges, which have seen enormous jumps in enrollment since the recession. Another casualty will be the Perkins Loan Programthat provides low-interest loans to low-income students. The maximum cap on Pell Grant money, which also serves low-income students, would have been bolstered an extra 1 percent every year under the proposed SAFRA. But today’s version of SAFRA eliminates that. Money that was going to go toward elementary and secondary education construction projects is being scrapped, as is some money intended for early education programs. The bickering and haranguing hinges on two numbers. See, the Congressional Budget Office initially estimated that overhauling federal student loans would free up $87 billion. Right now, private companies like student loan giant Sallie Mae provide loans to students that are fully backed by the federal government. It’s a tidy business model for the company–especially when they can charge upwards of 9 percent interest and rake in even more money in fees–and no wonder that they are fighting reform. But SAFRA would institute a direct loan program so that the federal government could loan money to students directly. With this new information and at President Obama’s request, colleges began switching over to the direct loan program last year. So when the CBO came out with its brand new estimates ten days ago regarding projected SAFRA savings, turns out that SAFRA would only save $67 billion in federal money. With $67 billion as the new magic number, the so-called "CBO score," Senate Democrats are scrambling to shave whatever they can from the bill. The Chronicle of Higher Ed explains it much better than I could:
The budget-office estimate is critical because Democratic party leaders in the Senate believe they have only enough support to pass the measure by using a procedure known as reconciliation, in which a bill that reduces overall federal spending can be approved with a simple majority of 51 votes, rather than the 60 necessary for ending a filibuster. That means the $67-billion, once it takes effect as the official "score" of the student-loan bill, would represent the maximum amount of new spending under the measure. For now, Congress could adopt the $67-billion figure immediately as the bill’s score, or continue to use the old $87-billion estimate, but it must use the new figure once it passes a budget outline for 2011, which is expected to occur in the next month or two.
Hang in there, folks! We’ll be keeping our eye on this bill. The current federal student loan program literally shovels taxpayer money into the pockets of corporations like Sallie Mae. Passing SAFRA is purely basic, common sense, but it’s sounding like SAFRA will continue to be whittled down.