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Student loans and health care

If you're wondering why the health care legislation is finally getting through Congress, you might look no further than the part of the bill that overhauls the nation's student loan business.

Yes, part of the health care package that has nothing to do with health care would end government subsidies to private student lenders. By cutting out the middlemen, the government projects $61 billion in savings over 10 years. That money would go directly to more student loans like Pell grants. It would also go toward reducing the deficit and offsetting expenses of the health care bill.

The overhaul appealed to many Democrats who were on the fence about the health care measures. Consider the comments of New Jersey Democrat Rob Andrews:

"This is a controversial, difficult vote for a lot of people, me included," he said. "And the more things that you can go home and say are in the bill that are sort of universally popular, yeah, it helps. To say our community colleges are going to benefit, there is going to be more Pell grant scholarships available for more people. Institutions that serve African-Americans, Hispanics, Asian Americans, Native Americans are going to benefit from this. It cuts corporate welfare, which I really think is the present program."

He continued, "It's another set of deliverables that people like."

The government's takeover of student loan programs means banks and lenders like Sallie Mae will lose. That's right -- it appears the financial industry lobby isn't going to win this one. But in a story last week on Marketplace, we pointed out that colleges were already going directly to the government:

...some schools are ignoring the student loan debate. They're starting to cut out the middleman themselves. Students don't have to get their government loans through the banks. There's already a direct government loan program. The loans aren't cheaper for the students, but they're more convenient. And more schools have started offering them.

Questions: Is this overhaul actually necessary? Will it be better for students to have the government as the major -- if not only -- choice for loans? (Here's a Q and A about aspects of the overhaul).

Democrats say this will end a piece of corporate welfare to Sallie Mae and the banks. Republicans see it as another piece of the government extending its power.
Does this deal sit well with you, knowing that health care might've died without it?

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I am pretty excited about this new health care bill, but now that I've learned about the student loan addition to the bill... well... I am ecstatic. This was really needed.

"part of the health care package that has nothing to do with health care"

Almost none of the health care package is truly about health care.

This is just another example of how messed up our federal government is.

How about gutting the fat out of the Universities, and then the fat out of the pharmaceutical companies, doctors salaries, and lastly, heaven help me, the profits out of insurance. What? a country where young people could go to school without paying for marble-lined corridors and get to the doctor if needed, then live to contribute back to society and help grow it? Now that's health care.

Let me get this straight - gutting doctor salaries will allow people to get to the doctor if needed?

From the article,

"the federal government guaranteed the private lenders that made Stafford and PLUS loans that it would repay 97 cents on the dollar for loans that go into default."

I strongly disagree with the taxpayer backing each loan, but..

"no students will be asked to—or have the opportunity to—shop for their Stafford loan, which is the most common kind of student loan, available to all citizens attending undergraduate or graduate programs at least half time." "Now the government will make all the loans."

What happens if the government decides that affirmative action applies to all student loans? Where would a middle class Caucasian male be able to get a secure, affordable loan?

Absolutely, this sits well with me.

I would have been for this kind of waste reducing financial frugality whether it was tied to health care or not.

On top of that, if we can't get what I wanted out of health care (an end to the insurance profiteers that I detest), I am at least happy with increased coverage, and if this got us there, more power to it.

This isn't about making school more affordable or the savings would have been passed along in lower rates for the students.

While I'm all for frugality, I will confess it bothers me that everyone keeps talking about the "banks" in the student loan industry... more than just "banks" will be affected by this change.

My spouse works for a non-profit student loan company - without the ability to work with the Federal loans, I anticipate layoffs of more than 100 employees in just this one company... including people who help students and families understand the loan and grant applications.

I wonder - will the Federal system be able to provide the one-on-one education and coaching needed to navigate the complicated forms required? Will they be able to provide the personal service when students and families have questions? Who will assist with understanding the options available to people having trouble repaying their loans?

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