President Obama signed into law the last piece of his mammoth plan to overhaul healthcare Tuesday, and achieved another dramatic and far-reaching change with the very same pen stroke -- revamping the way most Americas help pay for a college education.
The healthcare provisions and changes to the loan program for college students were sandwiched into a single piece of legislation -- the budget reconciliation bill approved last week by the House and Senate.
And while the overhaul to the healthcare system is historic, the changes in the student loan program -- though smaller -- are also drastic.
The bill shifts responsibility for making low-interest student loans to the government, ending the federal subsidies and guarantees now given to private banks that lend to students.
The new law ends the role of private banks as middlemen, cuts program costs, and channels the extra money to the neediest students, ending years of controversy over a system in which both the government and the private sector were major players.
Overhauling the loan program, which fulfilled an Obama campaign promise, was a kind of stealth accomplishment for the president, coming as rider on the final piece of healthcare legislation. It is a defeat for the banking lobby, which has long succeeded in blocking efforts to cut out their lucrative role.
Ironically, the healthcare debate has been replete with outsized warnings of a government takeover of healthcare, but the student loan overhaul marks an even more direct government move to supplant the private sector.
Rep. John Kline of Minnesota, ranking Republican on the House Education and Labor Committee, said the law amounted to "replacing a popular student loan model with yet another one-size-fits-all government bureaucracy" that would destroy some 30,000 jobs in the private student loan industry.
Sen. Charles E. Grassley (R-Iowa) said that students would prefer getting such crucial financing from a banker they know rather than from anonymous bureaucrats.
"I don't see how the students of this country are going to get the same service out of four call centers as they get from their individual banks," Grassley said.
Studies show that the government-operated program would be less costly, freeing up money to increase Pell grants for low-income students and aid to black colleges.
Obama, speaking to a crowd of students at a community college in suburban Virginia before signing the legislation, said money that should have been spent advancing the educational interests of students "instead was spent padding student lenders' profits."
"I didn't stand with the banks and the financial industries in this fight. That's not why I came to Washington," Obama said, adding that he and members of Congress who supported the legislation "stood with America's students."
In his speech, Obama offered a preview of how in this election year Democrats planned to cast the health and education initiatives as help for families against moneyed interests that have profited in their time of economic distress.
The success of a little-noticed student loan bill was a testament, in part, to the changes in the balance of special-interest power in Washington since Obama became president and the economy has struggled. The shift has eroded the effectiveness of financial industry lobbyists, especially as the public soured over bank bailouts and the role of financial institutions in precipitating the recession.
The Obama proposal "lent itself to the politics of the time more so than it would have three or four years ago," said John Dean, special counsel to the Consumer Bankers Assn., which opposed the legislation. "Many people see the recession was caused by the misbehavior by banks."
The new law will make it easier for borrowers to repay their loans if they take low-wage jobs by capping monthly payments at 10% of their income, down from 15%. In addition, the new law would cancel any debts that remain after 20 years; under current law, loan balances are forgiven after 25 years.