The Secretary of the Department of Education, Betsy DeVos, recently suggested that the government helped cover the costs of the Affordable Healthcare Act, popularly known as Obamacare, by subsidizing the student loan market in a Politico interview.
The comment came after a journalist asked the Education Secretary whether it was reasonable to pay a 6.25 percent interest rate, compared to a 2.4 percent interest rate on a car loan.
After saying it was a good question, Sec. DeVos continued by pointing out the government takeover of student loans occurred right after the recession in 2008, and she went on to say that “the federalizing of student loans was ostensibly to help pay for Obamacare. So you’re helping to pay for Obamacare, I guess, with your student loans.”
On the comment, the Department of Education hasn’t officially responded. However, plenty of critics voiced their concerns, claiming that Betsy DeVos lacks fundamental knowledge on higher education policy.
At any rate, both sides have a point to some degree, albeit one side, the critics, has more evidence to back itself up.
Why are Critics Speaking Up?
Taken the wrong way, the statement sure sounds condemning to Betsy DeVos’ cause and reputation. An outright claim that the student loan subsidization under the Health Care and Education Reconciliation Act of 2010 is a far-reaching claim, especially after considering factual, supporting evidence.
The Congressional Budget Office (CBO) supported the move, quoting different motivations. The CBO claimed that the direct loan program would save the government $61 billion over ten years according to a fiscal report.
Furthermore, the same report added that these savings would allot an additional $36 billion over the same ten-year period to the Pell Grant program. This program helps low-income and minority students gain access to college.
With all that in mind, it is easy to repudiate Betsy DeVos’ suggestion. Critics can assert that the savings from the government takeover were meant to supplement and expand the Pell Grant program, increasing access to college programs and higher education.
Looking at the Other Side
Playing devil’s advocate, the other side of the coin has a few interesting counter points. Some of them are somewhat valid, and some of them are a little cheap. (Note: some of these points are partial opinion, especially the idea about asset allocation)
While it is easy to say that savings from the direct lending program went towards the Pell Grant program, other sources often point out that the government was profiting from the federal student loan program, a fact that is often criticized. While these savings went towards Pell Grants, it can be said that these profits went towards something else, such as subsidizing the ACA.
However, countering that point, it is an easy accusation to make by saying the profits went towards the Affordable Care Act; however, it can be said this isn’t really grounded in any basis of fact. Theoretically, the same accusation could have been made for almost any government expense.
Furthermore, the government has been operating on a deficit every year for the last decade. Does any profit matter? For all we know, those profits helped pay out tax refunds for one year, provided fuel for “The Beast” (that huge car the President rides in), or even helped cover printing paper and ink expenses. (note: this point is a little suspect, Politifact looked into it and found that some funding was used for healthcare expansion, albeit a minuscule share of the overall healthcare bill)
Those are all just suggestions, which actually brings up another point. DeVos’ statement is just a suggestion. In fact, she even covered her tracks by using certain terminology such as “ostensibly.” By definition, this means something like “maybe” or “apparently, but perhaps not actually.”
With that in mind, her statement really means nothing at all. It could have been made for any reason. Is it politically serving? Does she actually believe it? Was it a mistake? Who knows?
So, Does it Really Matter? Why is This a Big Deal?
Sec. Betsy DeVos isn’t the first person to surmise that the federal student loan program was used to cover health care. In fact, Sen. Rob Portman said the same thing back in 2012. Why is it getting brought up again?
All of this criticism is in line with a popular trend today: hold all politicians highly accountable for what they say and do. This is also paired with a politically caustic environment where opposition plays a big role.
There is quite a bit of awareness when it comes to Betsy DeVos, and just about anything she does publicly could land her on the front page. This isn’t the first time Betsy DeVos has come under first this year either.
Right off the bat, then-nominee Education Secretary DeVos was blasted for flubbing student loan debt numbers in January of 2017. Many critics didn’t think she was suitable or up for the job. By March, more than 40 percent of student loan borrowers already had a negative view of Betsy DeVos.
Come June, Democat Sen. Elizabeth Warren announced an initiative that literally specialized in the oversight of Betsy DeVos, dubbed “DeVos Watch.” In July, she was being sued along with the Department of Education by multiple state attorneys general over the freezing of the Borrower Defense Rule.
With all that in mind, this recent development fits the bill perfectly. Sec. DeVos, a controversial figure, made a politically caustic statement regarding healthcare and student loans, both big ticket issues, that brought into question previous administrative policies.
Author: Andrew Rombach
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