Thursday, March 25, 2010

How Many Cheers?

by Andrew Gillen

I’ve got some mixed emotions about the bill that was just signed (Note I’m ignoring health care completely and just focusing on the education side.) Inside Higher Ed has a good breakdown of who won and who lost in the edusphere.

The main winners were Pell grant recipients, and the main losers were private lenders in the late FFEL program. There were a few other secondary winners and some collateral damage (open courseware took a hit, which is bad, and the higher ed lobby took a hit, which was good) but lenders and Pell grants were the primary show.

I’ve backed larger Pell grants, and I’ve favored the abolition of FFEL, so I’m happy with the actual outcome as regards these two issues. But my happiness is muted somewhat by the realization of how close we came to getting both of them wrong.

From what I’ve read, killing FFEL would have required reconciliation even if it wasn’t attached to health care, because it didn’t have 60 votes in the Senate. I find this highly discouraging. If we were starting a lending program from scratch, and someone proposed anything resembling FFEL, they’d be thought sadistic for deliberately inflicting unnecessary pain on the country. Once we had it, the only reason to adhere to it was the difficulty of transitioning to a better system. Many of these, such as job losses for those involved, carry a bit more weight when the unemployment rate is hovering around 10%, but are still not reason enough to keep FFEL, IMHO. So the fact that killing FFEL couldn’t get 60 votes has some pretty scary implications to me.

For Pell, while we ended up with a good outcome (more money, no entitlement), that was not the goal aimed for. The goal was to make the Pell an entitlement and increase it at the rate of inflation plus one. As Rich and I noted last week, this would have been a huge mistake.

I don’t know exactly how close we came to setting that mistake in stone, but it was pretty close. Had the Senate not sat on the bill so long that it resulted in a lower score from the CBO, and had they not needed to use some of the money from killing FFEL to pay for health care, I think it is very likely that we would have ended up achieving these misguided goals.

The Obama administration comes out of this with mixed evaluations. They ended up doing the right thing on both FFEL and Pell. For FFEL they deserve kudos - their position was correct, and they dragged everyone else kicking and screaming along with them. For Pell they don’t - their position was incorrect, and they were dragged kicking and screaming by reality into backing a better policy.

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