I mentioned in the last post something about the student loan bill and the health care bill getting combined through reconciliation. It’s important to understand that the rules of reconciliation always made it probably this would happen. In fact, that’s why the student loan bill has languished in the Senate.

Congress can only use reconciliation once per budget year, and so the student loan bill, which likely never had 60 votes, waited while party leaders determined whether they would need to use reconciliation for health care. If they did, as is now likely, they would have to combine the health care and student loan bills to use the measure for both.

Doug Lederman explains that the student loan bill is now the preferred vehicle to be used to attach the reconciliation “sidecar” for health care.

What does any of that have to do with student loans? Because the Democrats no longer have 60 sure votes in the Senate, they would have to pass the second piece of health care legislation through the budget reconciliation process — where it would be attached to the student aid bill.

(Word is that the Senate will not introduce its own version of the SAFRA bill; according to several people familiar with the situation, Democratic leaders in the House and Senate have reached agreement with White House officials on a version of the legislation that would be merged with the health reform bill.)

The catch here is that the student loan bill could get dropped from reconciliation altogether if it interferes with the vote counts on the overall package. In other words, if Democrats who oppose the student loan bill, perhaps out of protection for student loan servicers like Sallie Mae who employ people in their districts or states, would then vote against the entire package, certainly that element of the bill would be the first to go. And there are indications that some Democrats feel that strongly about the student loan bill.

Democrats voted overwhelmingly for SAFRA when the bill passed the House in September by a vote of 253 to 171, with just nine Democrats opposing the bill or not voting at all. But at least one of the Democrats who opposed the bill — Rep. Paul Kanjorski of Pennsylvania — was among the Democrats in the narrow majority of 220 who supported the House version of the health care legislation in November. In explaining his opposition to the student loan bill, Kanjorski argued that the legislation would take away jobs that Sallie Mae had created in his district. (Critics note that Kanjorski is also among the leading recipients of Sallie Mae’s campaign contributions.)

If Kanjorski is the deciding vote on health care, and he says to toss the student loan piece out, out it goes, not to return until at least next year.

In additon, more factors complicate SAFRA’s passage. The CBO just downgraded the savings from switching to direct government lending over subsidizing private student lending, from $87 billion over 10 years to $67 billion. In addition, Pell grants have soared in cost along with higher education costs, meaning that more dollars would have to be directed their way to maintain the preferred level of funding that would move more people into affordable colleges and universities.

That is significant because it means the bill would produce less money to do the many things that the administration and Congressional Democrats want — the CBO score calculates the cost of the programs the bill would create or expand at $200 billion.

Until Congress passes a budget resolution for the 2011 fiscal year, Democratic leaders have some leeway in deciding which set of budget numbers to use for the student loan portion of the reconciliation bill, so they could choose to embrace the $87 billion figure rather than the $67 billion score. But that decision rests mainly in the hands of Sen. Kent Conrad (D-N.D.), who heads the Senate Budget Committee and is a well-known budget hawk. He is likely to feel significant pressure to use the more up-to-date — and presumably more accurate — numbers.

So despite the connection between the health care and student loan bills in reconciliation, it’s increasingly likely that the latter will get tossed – despite it being a no-brainer policy that simply saves money in subsidies and plows it into grants for students to go to college.