From Huffington Post. Despite efforts by the banking lobbyists to prevent such an overhaul and claims that the Democrats would not have enough Democratic support (thanks to lots of $$ given to people like Ben Nelson from Sallie Mae, for example) it looks like Democrats will attach the Student Loan Overhaul to the Health Care Reconciliation bill.

Having finally decided to use the filibuster-proof budget reconciliation process to push health-care reform over the finish line, Democratic leaders have tentatively agreed to attach a long-sought overhaul of college financial aid to the measure.

That's because health care and federal financial aid have something very significant in common: Hugely powerful corporate interests devoted to preserving the status quo -- and willing to spend vast amounts of money on campaign donations, lobbying and PR to fight change.

When corporate interests are threatened, the Republican Party can often be counted on to fall into lockstep opposition -- but so can handfuls of skittish or pro-business Democrats in both chambers. As a result, when a well-funded ox is in danger of getting gored, good luck getting 60 votes in the Senate. Heck, even 50 can be a challenge.

The financial aid measure provides a case study in the susceptibility of elected officials, especially during campaign season, to pressure from moneyed interests.

At issue is the federal subsidy to private, for-profit lenders to make loans to college students that the government itself can make directly, with no subsidy, and just as well. Eliminating the subsidy is expected to save somewhere between $47 billion and $87 billion over the next 10 years. President Obama is proposing to take that money and use it for direct grants to needy students instead.

This action would achieve a few things:

1. Prevent another lobbying group from hijacking needed reform with a "Town Hall Part II" scenario (the claim that this will cost jobs has been debunked) and the GOP from fillibustering yet another key agenda item for President Obama.

2. Since reconciliation can only be used once per year (I just learned that) it "kills 2 birds with 1 stone."

3. Allows President Obama to chalk up not 1 but 2 major victories and fulfill not 1 but 2 promises.

4. Saves taxpayers money and actually boosts the rationale for reconciliation because it saves more money over time.

5. it shows the White House is becoming more bold and fighting back against the GOP tactics of obstruction.

This overhaul passed overwhelmingly in the House and it appears they have at least 50 Senators on board, so it would be wise to add this on. When the opposition gives no wiggle room, sometimes you have to find an unconcentional way to ensure victory.

Here's a CNN Fact Check of this program. It actually says the Obama Administration may be underestimating the savings, but it also points out that President Obama does plan to spend the money on education programs (which I think is smart investing!) so that's where the debate lies.

– Erin Dillon, a senior policy analyst at the Washington think-tank Education Sector, told CNN the government "can basically borrow at a much lower cost" than private companies. And since the financial meltdown of 2008, the feds have bought large numbers of loans from struggling private lenders, enlarging the government's share of the market. Dillon says she supports the president's proposal.
– The administration tried the same thing in 2009, and a bill that would enact the plan is pending before the Senate. During debate in the House of Representatives, where it passed in September, Republicans criticized it as a "government takeover" of the student loan industry.
– The administration's estimate is more conservative than the one put out in September by the nonpartisan Congressional Budget Office. The CBO report put the savings from the House-passed bill at at $80 billion, after factoring in a $7 billion cost to the Department of Education to manage student loans itself. An industry-backed alternative that leaves private companies to service government-issued loans would save $67 billion, $13 billion less than the original bill, the CBO reported.
– The Education Department attributes the discrepancy between its projections and the CBOs to differing assumptions about the future of interest rates.

Bottom line: Estimates published by both the administration and Congress suggest that ending the loan subsidies would save several billion dollars a year - but the Obama administration has plans for the money it would save in an education budget that is projected to grow by 6 percent in 2011.