The End of Student Debt As We Know It?

Well, I know you probably don’t like the lack of posts as much as I hate the lack of time I’ve had to write them recently.  Well, I still have very little time on my hands, but I’m making time to write this; sure, it’ll mean a couple of nights that I’m up later than I would otherwise be, but it’s worth it.  One thing I do know is, is that millions of students across the country, and their parents, can sleep a bit more soundly tonight than even last night.  That is because today, President Obama signed the health care reconciliation bill.  You might be saying to yourself at this point: “health care?  Since it’s already been passed, do we have to hear about it again?”  Don’t worry, I’m not writing just another health care reform post, though there is certainly some of that in the bill that our President signed into law this morning.  You could be forgiven for missing the fact that a major reform to the way Federal college loans are handled was tucked into the reconciliation bill, as it was certainly overshadowed by health care itself.

Of course, since the bill’s overall purpose was to fix the Senate’s health care bill that President Obama signed last week, it is important to at least mention the specific fixes included in the reconciliation legislation.  By now, it should be clear that the number one feature of reconciliation was to take out the controversial “Cornhusker Kickback”.  According to CNN, this special deal that was in the original Senate bill would have exempted Nebraska from paying all new Medicaid costs under the program.  Symbolically, this provision came to represent the kind of backroom deals that are a plague on our government.  Instead, the Federal government will pay for the new Medicaid expansion for all states from 2014 to 2016, but then reduce its contribution to 90% of the costs in 2020.  This is undoubtedly part of the reason that reconciliation raises the price tag of health care reform by $65 billion to $940 billion overall.  However, there are other important things relating to health care in the fixes.

The Way Federalism Should Work

In the middle of the wars in Afghanistan and Iraq, the crisis in Haiti, and the healthcare reform effort, education has not gotten as much press coverage as it perhaps should have.  In fact, one of the signature education programs of the current administration is about to start to take effect.  Known as Race to the Top, this grant program tucked into the stimulus package would, according to USA Today, favor the charter school idea of education reform while tying salaries to student test scores.  In contrast to the healthcare effort, it is not surprising that there has been very little coverage of this program; it is neither very expensive nor very controversial.  While many school districts have not signed onto proposals for the grant money, and several states including Texas are not submitting a bid for grant money, the program enjoys wide support according to the New York Times, and the first round of money is going out this week.

Far too often, we are presented with legislation that costs an extreme amount of money and are very controversial for whatever reason, not to mention with questionable effectiveness.  The Race to the Top grant program is noteworthy primarily because of its size, or rather its lack of financial heft.  According to the USA Today article linked above, the total amount of money allocated for the program is $4.35 billion.  Compare that to the various healthcare proposals we have seen at one point; the cheapest prices among them were over $700 billion.  Granted, education reform is not even close to the same scope as healthcare reform, but the gap between the programs’ costs is notable.

Even more interesting, however, is a peculiar thing that the New York Times article points out.  Normally, the government pays first and expects results later, but this time, it seems the normal paradigm has been reversed.  According to the Times, the prospect of receiving millions of Federal dollars has encouraged several states to implement changes sought by Education Secretary Arne Duncan and President Obama in establishing this grant fund.  This is all without spending a dime of the grant money.  What could have caused such a fundamental shift?