Tentative deal gives new life to overhaul of student loans
WASHINGTON — Democratic congressional leaders struck a tentative agreement on Thursday that breathes new life into President Barack Obama’s proposed overhaul of federal student loan programs.
The deal would bundle the bill into an expedited budget package along with the Democratic health care legislation, which would allow for both measures to be passed by the Senate on a simple majority vote. Without the deal, the student loan bill would have been unlikely to pass because it lacked the 60 votes needed to overcome a filibuster.
The bill would end government payments to private, commercial student lenders, leaving the government to lend directly to students. It would also redirect billions of dollars to expand the Pell grant program for low-income students, and to pay for other education initiatives.
The maximum Pell grant is set to rise to $5,550 for the 2010-11 school year and, under the deal struck Thursday, would increase automatically each year in line with inflation. As many as eight million of the nation’s lowest-income students receive Pell grants to help pay for college each year. Under current law, Congress must determine any increases.
Private banks had lobbied fiercely against the bill, which would cut off a longtime stream of revenue. Even on Thursday, lobbyists for the private lenders made a last-ditch effort to stop Democrats from adding it to the budget package.
House Democrats predicted that packaging the two proposals in an expedited budget reconciliation bill would help them secure the needed votes on health care because the financial aid bill is popular. In September, the House adopted that bill, the Student Aid and Fiscal Responsibility Act, by a vote of 253-171.
Senate Democrats said that they could lose some votes as a result of the packaging, but that they did not believe it would swing the outcome.
Some Democrats in the Senate, where the private student loan industry has strong allies, had resisted tying the two bills together. But federal education officials warned on Thursday that if Congress failed to act, millions of students might see their Pell grants cut by 60 percent.
© 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The deal would bundle the bill into an expedited budget package along with the Democratic health care legislation, which would allow for both measures to be passed by the Senate on a simple majority vote. Without the deal, the student loan bill would have been unlikely to pass because it lacked the 60 votes needed to overcome a filibuster.
The bill would end government payments to private, commercial student lenders, leaving the government to lend directly to students. It would also redirect billions of dollars to expand the Pell grant program for low-income students, and to pay for other education initiatives.
The maximum Pell grant is set to rise to $5,550 for the 2010-11 school year and, under the deal struck Thursday, would increase automatically each year in line with inflation. As many as eight million of the nation’s lowest-income students receive Pell grants to help pay for college each year. Under current law, Congress must determine any increases.
Private banks had lobbied fiercely against the bill, which would cut off a longtime stream of revenue. Even on Thursday, lobbyists for the private lenders made a last-ditch effort to stop Democrats from adding it to the budget package.
House Democrats predicted that packaging the two proposals in an expedited budget reconciliation bill would help them secure the needed votes on health care because the financial aid bill is popular. In September, the House adopted that bill, the Student Aid and Fiscal Responsibility Act, by a vote of 253-171.
Senate Democrats said that they could lose some votes as a result of the packaging, but that they did not believe it would swing the outcome.
Some Democrats in the Senate, where the private student loan industry has strong allies, had resisted tying the two bills together. But federal education officials warned on Thursday that if Congress failed to act, millions of students might see their Pell grants cut by 60 percent.
© 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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