Of all the grief Democrats have taken in the health care debate, perhaps no aspect of it caused greater heartburn than the extra Medicaid money for Nebraska that Senate Democratic leaders inserted into the Senate bill in hopes of locking in the support of Senator Ben Nelson, Democrat of Nebraska.
Mr. Nelson has long since disavowed the provision, which Republicans continue to deride as the “Cornhusker kickback.” Democrats plan to remove it from the final health care legislation.
Harry Hamburg/Associated Press Senator Ben Nelson on Capitol Hill on Wednesday.But now that Democrats are planning to include an overhaul of student loan programs in the expedited budget package along with the final health care legislation, they may end up losing Mr. Nelson’s support anyway.
Mr. Nelson is a strong ally of Nelnet, a private student lending company based in Nebraska. Nelnet is one of several private banks whose lending practices have been questioned by federal and state officials.
In 2007, the Bush administration determined that Nelnet improperly collected $278 million in federal subsidies, but the company was allowed to keep the money.
Jake Thompson, a spokesman for Mr. Nelson, said that the senator would wait to see final legislative language before deciding how to vote, but that Mr. Nelson was reluctant to support any legislation that ended the role of private banks in federal student loan programs.
“He’s said he’d have a hard time supporting a bill brought forward using reconciliation that eliminates private student lending,” Mr. Thompson said. “But he’d have to see the actual language to determine how he’d vote.”
President Obama has proposed an overhaul to the student loan program that would stop payments to private banks and save billions of dollars that would be redirected to Pell grants for low-income students. The private lenders now get paid by the government to make risk-free loans using taxpayer money. The banks have lobbied fiercely to keep a grip on some profits from federal student loan programs.
Mr. Nelson, who is generally known as a fiscal conservative, is particularly concerned that jobs could be lost in his home state. Officials say the student loan overhaul, by switching all schools over to loans made directly by the federal government, would save the taxpayers as much as $67 billion over 10 years.
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