Student Loan Shakedown

On Constitution Day, September 17, the House of Representatives voted 374-75 on an amendment which would ban all federal funding for ACORN, the Association of Community Organizations for Reform Now. However, the amendment was attached to the House student loan bill, which, in turn, would end private lending for student loans.

Will this victory ring hollow among conservatives? The House vote for the overall student loan bill was “253-to-171, largely along party lines,” with Republicans generally opposing it, according to the Wall Street Journal.

The student loan bill represents a more overt government grab for power than health care reform’s “public option,” some say. Even Time Magazine characterized the bill as “in many respects, much closer to an actual government takeover than its relatively tame market-driven health-reform.”

The Congressional Budget Office originally scored the student loan bill as “saving” Americans $87 billion in taxpayer dollars, but later added market risk into its analysis and found that the government would save not $87 billion, but $47 billion over ten years. “CBO found that after accounting for the cost of such risk…the proposal to replace new guaranteed loans with direct loans would lead to estimated savings of about $47 billion over the 2010-2019 period—about $33 billion less than CBO’s estimate under the standard credit reform treatment,” stated the revised CBO analysis (emphasis added). Their reason was that “defaults could be higher than projected” (emphasis added).

Not surprisingly, the mainstream media covered the first number but few readers are aware of this revision.

As the bill heads to the Senate, Republicans will have to contend with the quandary that a vote for the student loan bill, which could cost as many as 35,000 private-sector jobs, will expand government power, but a vote against the Student Aid and Fiscal Responsibility Act —assuming the Senate passes an identical amendment —would also be a vote against stripping ACORN of federal funding.

Then again, if the Senate passes a differently-worded bill, the ACORN amendment could simply be removed in conference.

Bethany Stotts is a staff writer at Accuracy in Academia.