Congress adopted single payer student loans
by Sheldon H. Laskin

One of the ironies of the health insurance reform bill is the two dramatically different positions the Adminstration and Congress took on single payer health insurance as contrasted with single payer student loans, which were married together in the reconciliation process. Where the student loan program was concerned, Congress correctly abolished any role for the private sector in direct lending to students.

As Christi Parsons and Janet Hook described the measure in the Los Angeles Times:

The bill shifts responsibility for making low-interest student loans to the government, ending the federal subsidies and guarantees now given to private banks that lend to students.

The new law ends the role of private banks as middlemen, cuts program costs, and channels the extra money to the neediest students, ending years of controversy over a system in which both the government and the private sector were major players.

Overhauling the loan program, which fulfilled an Obama campaign promise, was a kind of stealth accomplishment for the president, coming as rider on the final piece of healthcare legislation. It is a defeat for the banking lobby, which has long succeeded in blocking efforts to cut out their lucrative role.

Ironically, the healthcare debate has been replete with outsized warnings of a government takeover of healthcare, but the student loan overhaul marks an even more direct government move to supplant the private sector.

In other words, Congress adopted single payer student loans. But for health care, Congress retained for profit insurance companies as the middleman in health care.

Why the Administration and Congress were willing to take on the financial industry and not the insurance industry is not clear. Perhaps the former was just too politically weakened right now in view of the financial crisis, although I doubt it. Whatever the reason, single payer (health care) advocates need to carefully monitor the direct student loan program going forward. If, as I suspect, it will be both very successful and extremely popular, single payer advocates need to use that success and popularity in advocating for single payer health care. Because of the private sector’s role in the student loan program up to now, there should be many parallels between the evils of private sector involvement in student lending and in health care financing.

If single payer student loans work out nicely (I think they will), we can make substantive points in favor of single payer health insurance. And it is worth noting that the same constituency who will benefit from single payer student loans (young people) are precisely the population that lacks private health insurance and will be compelled to purchase it.

Sheldon H. Laskin teaches State and Local Tax at the University of Baltimore Graduate Tax Program, where he is Adjunct Professor of Law.