I did get nervous last week that the no-brainer student loan bill, which would end the privatization of that industry, save over $80 billion dollars over ten years through direct student lending from the government instead of government-backed, government-subsidized private lending, and plow that money into Pell Grants to send kids to college, was facing a lobbyist assault and could be killed. However, the mistake the traditional media made in discussing this bill is a failure to provide the proper context. The student loan bill, with its pure focus on the budget, can be dealt with through reconciliation. The House has provided reconciliation instructions on the bill. There appear to be the minimum 50 votes required in the Senate for it to pass. In fact, there’s really only one reason it hasn’t passed yet.

The health care bill. Neil King at the Wall Street Journal finally provides the context.

For all the administration’s jousting at banks, however, the primary obstacle holding up the direct-lending bill isn’t Sallie Mae or high-priced lobbyists.

Instead, Democratic lawmakers are waiting to see if they will try to move some of their health-care measures as an attachment to an education bill, through a process known as reconciliation, which requires only 51 votes to pass.

“There is broad Democratic support for making needed changes to the student loan program so that we can invest in education and our economy,” said Sen. Tom Harkin of Iowa, Democratic chairman of the Senate health committee. “The timing of action on it, however, continues to be linked to the legislative strategy around health reform.”

Just to explain this further, reconciliation is kind of a one-shot deal. There’s basically one reconciliation bill per budget. So if you may need that process for the health care bill, you cannot finish the student loan bill. They would have to go together. To the Democrats’ credit, they did not jump the gun on the student loan bill, even though it would be a real accomplishment they could tout, and with reconciliation seen as probably the only option to finish off the health care bill, they still have the ability to do that and end the privatization of student lending besides.

I appreciate Arne Duncan getting tough on Sallie Mae and the banks, but while lobbyists may be making some nervous about the bill, it’s really the consequent timing with the health care bill which is causing the delay. Now, the hope is that, if health care does go down in flames, that the student loan bill isn’t consumed in the process. We’ll have to wait and see on that.