The National Association of Student Financial Aid Administrators has a great post up this morning highlighting the status and predicted content of the joint health care/student loan bill that is now working its way through Congress. It also has this really helpful chart to plot the progress of the legislation:

While progress on the bill is good news, other reports are pretty disappointing. As promised, the bill would eliminate subsidies for the bank-based student loan program and turn to 100 percent direct lending—a move that would save $68 billion according to the Congressional Budget Office (CBO). Of that, about $6 billion would go to covering increased administrative costs for the direct loan program and an unspecified portion will have to go to deficit reduction.

After that is where the real changes show up. While the bulk of savings will be directed to increasing Pell Grants, earlier versions of the legislation included exciting programs aimed at improving college completion, helping community colleges, ensuring quality early childhood education, and a number of other purposes. Now, it’s looking like savings will only be used for Pell Grants, providing formula funding for minority serving institutions, and some health care spending.

The potential for enacting better loan policy and increasing grants is certainly a welcome move, but I have to admit feeling somewhat disappointed at the potential loss in funds aimed at postsecondary completion and community colleges. (Others have also expressed some disappointment here and here.) It’s a shame because these two programs were in effect Pell Grant insurance—initiatives that would improve the utility of federal dollars by doing more to help recipients earn a postsecondary degree. The graduation rate among all students, including Pell recipients, is unacceptably low and this was really an opportunity to change the federal role in helping colleges and universities do something about that issue.

At times like this the saying about making lemonade out of lemons is apt. But that doesn’t mean it’s not a slightly bitter outcome.

UPDATE: In rereading this a few hours later it struck me that my original intent in the last line did not come through. From a policy standpoint, removing subsidies for student loan companies is a smart move, one that makes the entire system operate more efficiently, with less waste, and in a way that creates billions of additional dollars for students. That’s the overwhelming majority of the bill. My concerns and frustrations are more to do with the leftover parts and how they could have been put to use versus what will emerge as a result of political realities and negotiations.