NYT: Obama's Student Loan Overhaul Endangered

March 10, 2010

Obama’s Student Loan Overhaul Endangered
By DAVID M. HERSZENHORN

WASHINGTON — With Democratic Congressional leaders and the White House struggling on Wednesday to finalize the details of major health care legislation, House Democrats were desperately trying to prevent another of President Obama’s top legislative priorities – an ambitious overhaul of student loan programs – from becoming a casualty of the health care battle.

But Democrats in the Senate, where the private student lending industry has strong allies, predicted on Wednesday night that the education bill would not be part of an expedited budget measure containing the final revisions to the health care legislation. Some Democrats said that such a move would stall the student loan changes at a minimum for several months, and perhaps kill the overhaul altogether.

Mr. Obama’s plan would end a program in which the government pays private, for-profit student lending companies to make risk-free loans using taxpayer money. Instead, the proposed overhaul would broaden the government’s existing direct-lending program, saving billions of dollars that the president had proposed using to expand Pell grant scholarships for low-income students.

But the education bill is strongly opposed by some Senate Democrats, particularly those in states where for-profit student lenders are major employers. In a letter to the majority leader, Senator Harry Reid of Nevada, six Democrats said they disliked the president’s proposal.

"We write to make you aware of our concern with provisions of contemplated student lending reform that could put jobs at risk," the senators wrote. "Increase our nation’s commitment to higher education funding is a priority, but we must proceed toward this objective in a thoughtful manner that considers potential alternative legislative proposals, while still delivering an equivalent amount of savings over the next ten years.

The letter was signed by Senators Thomas R. Carper of Delaware, Blanche Lincoln of Arkansas, Ben Nelson of Nebraska, Bill Nelson of Florida, Mark Warner of Virginia and Jim Webb of Virginia.

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http://www.nytimes.com/2010/03/11/us/politics/11loans.html?src=twt&twt=nytimespolitics