The Washington Post has the best set of numbers on the impact of student loan reform, passed inside the reconciliation bill last night and expected to be approved by the Senate this week. The subsidies for private lenders and banks will still be cancelled, saving the federal government $61 billion over 10 years. But that number is a reduction from the $87 billion dollars expected earlier as a result of the reform, mainly because colleges have started prioritizing direct financial aid in advance of the bill’s passage. In addition, housing the bill inside the reconciliation sidecar meant that some money would get siphoned off for deficit reduction (to comply with reconciliation rules) and paying for the health care bill. So…

By ending the subsidies and effectively eliminating the middleman, the student loan bill would generate $61 billion in savings over 10 years, according to the nonpartisan Congressional Budget Office [...]

The amount directed at Pell grants would drop from $40 billion to $36 billion, and a portion of the smaller amount would go toward closing an unexpected shortfall in the grant program, oversubscribed because of the recession. The annual Pell grant would rise to $5,975 by 2017 from the current $5,550, and for the first time, it would be linked to the consumer price index. In the original House bill, the Pell target was $6,900.

Community colleges would get $2 billion, down from $10 billion in the original bill. More than $20 billion in initiatives for early education, K-12 school modernization and student loan interest-rate reduction would be eliminated. But a $2.6 billion investment in historically black colleges would survive. The new bill also includes a $1.5 billion initiative that would cap a borrower’s monthly loan payments at 10 percent of income, down from 15 percent.

Indexing Pell grants and getting those investments into community colleges and historically black colleges and universities is a progressive achievement. But the changeover from higher education to direct government lending sucked a healthy piece of the money out of the legislation, and the cockamamie way it had to passed did more damage.

Still, once the Senate passes the sidecar, over $40 billion dollars will flow directly to students instead of banks. I cannot quarrel with that.