Please Tell Me This Isn’t True

Working on federal policy and keeping your wits about you requires a pretty high tolerance for cognitive dissonance and general b.s. But I’m having a really hard time wrapping my head around this: In September 2009, the House of Representatives passed the Student Aid and Fiscal Responsibility Act, or SAFRA. The bill was designed to save $87-billion over 10 years by moving students from the more-expensive FFEL progam, in which the government subsidizes private banks to make loans, to the Direct Loan (DL) program, in which the government lends money directly. The plan was to use the $87-billion to boost Pell grants, improve community colleges, and help more low-income students earn degrees.

When the bill passed the House, it looked very likely that it would pass the Democratic-controlled Senate. Colleges can switch from the FFEL program to DL quickly, but not instantaneously. Seeing the political handwriting on the wall, and with encouragement from the U.S. Department of Education, many colleges begin to make the switch, so they’d be ready in time for the incoming class of 2010. Meanwhile, the Senate decided to slot student-loan reform for after health care, partly to focus on health care, and partly because they knew they could pass student-loan reform via the budget reconciliation process, which only requires a simple majority and is thus un-filibusterable.

Then health care proceeded to drag on. And on. And on. Finally, it looks the whole thing is going to come to a decision, perhaps this week.

But time has passed since the original $87-billion cost-savings estimate was calculated. So they ran the numbers again, using more up-to-date data, and came up with a lower number. Why? In part, because the number is based on the savings realized from the projected number of colleges switching from FFEL to DL, calculated from the day the estimate is made to the point at which all of the switching is done. Thus, all of the colleges that made the switch over the last year don’t count in the estimate of future savings, because the savings aren’t in the future anymore. The savings have already occurred. Confronted with the smaller number, and with the political window for student-loan reform closing rapidly, Congress is reportedly working to radically scale back their efforts to improve community colleges and help more low-income students earn degrees.

That is insane. Crazy. The FFEL-DL conversion savings haven’t changed! They’ve just already happened! The total amount of money available isn’t any different than it was! I understand there are rules and procedures in place for making and adhering to budget and revenue estimates, etc., etc. but such rules are meant to enforce rationality on the budgeting process, not throw rationality out the window.