The projected cost of Obama's plan to expand Pell Grants and diminish the role of the private sector in the student loan program has exploded over the past year as more people seek college loans in the weak economy. Meanwhile, the potential savings from knocking private lenders out of the system has diminished as one in five colleges has already turned to government lending.
Rather than saving $50 billion over the next decade, the student loan initiative is now projected to increase deficits by about $5 billion, according to preliminary estimates provided to Democratic lawmakers. Including it in the health-care package could wreck efforts to meet the deficit-reduction goals required under reconciliation, aides said.
Advocates of the loan program urged congressional budget leaders Tuesday simply to use the old estimate when putting the reconciliation package together. But Conrad resisted, according to people familiar with the meeting, arguing it is no longer valid.
