Cutting Corporate Subsidies, Helping College Students -- What's Not to Like?

Last week, the U.S. House voted to end its subsidies of private lenders for college loans, and shift the billions of dollars which had previously gone to corporate profits into direct loans and grants for students.  The Obama Administration and Democratic leaders estimate that the change in policy could save $80 billion for the federal government. 

But something happened on the way to cutting corporate subsidies and streamlining government spending. The Washington Post's E.J. Dionne:

The bill, which passed 253 to 171, would allocate about $80 billion over the next decade for new loans, community colleges, school construction and early childhood programs without increasing taxes or adding to the deficit. How? Instead of paying bankers to provide loans for which they bear no real risk, the government would make the loans directly...

The only knock on the proposal is ideological: that government is "taking over" the student loan program. But it's already a government program. The bill simply eliminates corporate welfare...

Instead of focusing on how the bill advances values typically regarded as "centrist" -- government efficiency, pay-as-you-go budgeting -- the banks' defenders bury the specifics behind abstract discussions of "big government." Yet I'd venture that middle-of-the-road Americans prefer that their tax money go toward education rather than to padding the profits of financial firms.

The votes on the bill from the Missouri delegation broke down on party lines, with all Democrats supporting the bill, and Republicans voting against.  Rep. Blaine Luetkemeyer had some of the strongest language in opposition, saying the proposal "amounts to nothing more than a government takeover of student loan lending that will hurt students and their families."  A former banker himself, Luetkemeyer's support of government subsidies for his industry is not surprising, I guess.

There doesn't seem to be much evidence that the change will adversely impact students, however. 

Terry W. Hartle, senior vice president of the American Council on Education, which represents about 2,000 public and private colleges, universities and related organizations, called the bill "the biggest redesign in the structure of federal student aid that I have ever seen. . . . Many, many students will benefit from it."

...The core of the bill would transfer about $40 billion in savings to the Pell Grant program, which aids low- and moderate-income students. The maximum yearly award would rise from $5,350 per student to $5,550 next year and eventually to $6,900 in 2019, with the grants indexed to inflation starting in 2011. That would enable Democrats to claim a breakthrough for college affordability at a time of economic worry for many Americans.

In addition, the bill also included money for a number of smaller programs to help students:

• $10 billion to help community colleges
• $8 billion to help states improve early-learning programs for children from birth to age 5
• $4 billion to modernize and renovate public schools
• $3 billion to bolster college access and completion
• $2 billion for historically black colleges and universities and other institutions serving minorities.

What's not to like?