Cost projections complicate Democrats' efforts to twin health, student loan measures

Mar 10, 2010 — Washington Post

Post Editor

By Lori Montgomery and Shailagh Murray

The projected cost of President Obama's plan to overhaul the federal student loan program has exploded over the past year, making it almost impossible to include the popular measure in the same deficit-reduction package that would be the vehicle for the final pieces of Obama's health care initiative, Democratic sources said on Wednesday.

In the weak economy, demand for student loans has risen dramatically, driving up the cost of Obama's proposal to expand Pell Grants and provide them to all who qualify, Congressional budget analysts, meanwhile, have told Democratic lawmakers that they are likely to see far less savings from Obama's proposal to diminish the role of private lenders in the guaranteed student loan program because one in five colleges has already abandoned the program in anticipation of the changes.

As a result, rather than saving $50 billion over the next decade, Obama's student loan initiative is now projected to increase deficits by about $5 billion over that period, Democratic sources said, adding that including it in the same package with fixes to the health care bill would wreck efforts to meet the deficit-reduction goals that are required under reconciliation rules.

At a meeting late Tuesday in the office of House Speaker Nancy Pelosi (D-Calif.), advocates of the student loan program -- one of Obama's top domestic priorities -- urged Senate Budget Committee Chairman Kent Conrad (D-N.D.) to simply use the old cost estimate when putting together the reconciliation package. Conrad resisted, according to people familiar with the meeting, and leaders from both chambers planned to revisit the issue in a meeting Wednesday evening.

On Wednesday, Conrad declined to publicly discuss the exchange, but acknowledged that he opposes adding the education measure to the reconciliation package.

"I think it threatens the health care bill," he said in an interview. "It would threaten to sink them both."

Democratic leaders pushing to finish health care before the Easter recess have been weighing whether to add the education measure, a move that could allow Obama to claim victory on two of his top priorities in a single signing ceremony. Anticipating problems in the Senate, where a handful of Democrats are eager to protect lenders in their home states, congressional leaders included the student loan overhaul in budget reconciliation instructions for the current fiscal year. That would provide the bill with the same protections from a Senate filibuster that are also being extended to health care. But under reconciliation rules, the two measures must move in tandem.

Six Senate Democrats signed a March 9 letter to Senate Majority Leader Harry Reid urging him to consider alternatives to the student loan overhaul that would put fewer jobs at risk, while still increasing education aid. Signatories include Sen. Ben Nelson (D-Neb.), whose state is home to Nelnet, a major private lender, and Sens. Bill Nelson (D-Fla.) and Blanche Lincoln (D-Ark.), all of whom have expressed serious concerns about the health-care bill. Others on the list are Sens. Tom Carper (D-Del.), Mark Warner (D-Va.), and Jim Webb (D-Va.). The two Virginia senators represent hundreds of employees of Reston-based Sallie Mae.

Ben Nelson said he would vote against the reconciliation bill if the student loan language is added. Carper, a health-care supporter, warned, "It's problematic" if the two measures are combined.

House education chairman George Miller (D-Calif.) told reporters that he was optimistic the student loan language would be added, although he said negotiators were awaiting a final cost estimate from the Congressional Budget Office.

Senate Majority Whip Richard Durbin (D-Ill.) told reporters that he supported adding the education provisions, but not if it costs Democrats a health-care bill. "The first priority is passing health care reform," he said.

Democratic aides said a major opponent of merging the two bills is Conrad, who fears procedural complications. The reconciliation package, now expected to be unveiled next week, would amend the Senate health-care bill to address concerns of House members, who are refusing to vote for the Senate bill without an ironclad assurance that the fixes also will clear both chambers.

Conrad, among others, is wary about adding any language that could cost votes and lead to GOP parliamentary challenges, thus jeopardizing passage of health care