Democrats look to combine health care, student loan reform

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More money could be available to students who qualify for federal aid.

The initiative is based on an ongoing push to link college loan and health care reform and came out of recent talks among congressional Democrats.

Some say it could inspire additional budget savings, according to previous reports. It is intended to evade the U.S. Senate’s effort to accelerate a legislative process called budget reconciliation.

“It has to somehow be tied to a budgeting manner,” said political science assistant professor Chris Owens.

The reconciliation bill technique is not very frequently used, he said, and there are many complicated loops the U.S. House of Representatives must jump through.

But by reconciling, Congress will be able to pass both parts of the bill within the next two weeks.

The current loan system allows private lenders to distribute Federal Family Education Loan Program funds.

“Lenders lend the money to students and sell the loans to the Department of Education,” said Mary Kay Bean, spokeswoman for Chase Bank’s Michigan branches.

The proposed bill addition would skip this step, not allowing private lenders to start the loan process. This will save money, Democrats say, by removing subsidies and control from the private loan sector and placing it under governmental control.

President Barack Obama’s own proposal to stop the bank-based process could spare about $67 billion in 10 years, according to a recent congressional budget analysis.

All Chase FFELP loan applications will have to be received by April 17, Bean said. Chase is one of many loan providers available to Central Michigan University students through the Office of Scholarships and Financial Aid.

But CMU does not encourage students to take advantage of private loans that are not federally associated, said Diane Fleming, associate director of scholarships and financial aid.

Alternative loans are not very forgiving, Fleming said, and do not allow as much consolidation or alternative payments.

“We discourage students from taking out alternative loans,” she said. “(Government loans) are by far more advantageous than any private loan.”

Students are only eligible to take out alternative loans if they have taken out their federal loan limit, which would include the FFELP loan.

Citi Bank, another lender for CMU students, does not support the measure.

“We support a solution that preserves competition and choice for students, families and colleges,” said Mark Rodgers, Citi’s director of public affairs. “We have voiced our concern about the risks associated with the proposed legislation.”

The bill will be an update of the Student Aid and Fiscal Responsibility Act, which the U.S. House approved in September.