Yes, a progressive bill passed yesterday. One that liberals had been attempting for decades, one that confounded past Democratic Presidents, one that forced Congress to take on a massive lobbying coalition of politically powerful industries, one that looked nearly impossible at various points along the way, one that only made it through progressive advocacy and activism as well as a fair amount of political leadership.

No, not the health care law. I’m sure Mitt Romney and AEI resident scholars did not favor the truly progressive bill about which I’m speaking.

(By the way, liberals pouncing on that as if I’m supposed to feel good about it, could you, y’know, stop? Do you understand that continued defenses of the Obama agenda with lines like “But this is what Republicans proposed!” doesn’t do much for, um, people who dont believe Republican ideas work? And that it makes it look pretty much like liberals have no ideas? Could you please cut that out?)

I’m talking about the sweeping changes to the student loan industry, where banks and lenders suffered an unequivocal loss to their profits, and students gained a great victory for making college more affordable.

The previous system allowed banks to make risk-free, government-guaranteed loans, and reap billions in taxpayer subsidies for the privilege. Now, we have a direct-lending system, where the government, instead of backstopping loans, will just lend to students themselves. This saves $87 billion dollars – the news of its imminent arrival already changed the market dynamics and put the subsidies on a trajectory out the door, and the passage of the law fully cancels the last $61 billion. Banks making record profits lose one area where they were receiving what amounts to free money from the government. Yes, this is nationalizing an industy – one that was effectively nationalized already through an explicit guarantee, and will now be made more efficient and cost-effective.

In return, around $36 billion dollars goes into the Pell grant program, allowing it to index to inflation for the first time. Yes, the Pell grant used to cover 75% of the costs of college for low-income students, and only 35% today. But this rise in the grant award over time will alleviate that, and hopefully return it to a number that puts 8 million students in a better situation to finance their higher education. In addition, future borrowers will have lower rates and a not-for-profit lender delivering those rates, so students are helped on the front end and back end.

Along the way, because of the early success of the program prior to the law’s passage, as well as the recession driving demand for college financial aid, the savings were less than expected. And using the reconciliation process, and teaming the student loan program with health care, shrunk the pot of money even further. Key programs like early childhood education and community colleges do not get funding in the bill (though historically black colleges do). $19 billion dollars got stripped out. But half of that is due to using the reconciliation process; the student loan title had to save a certain amount of money. The $9 billion that goes from bankers to the health care bill is a better way to pay for that than taxing the middle class. The student loan bill may be more modest, but it’s an unquestionable progressive victory.

That’s why it’s so amusing to me that the usual suspects just discovered it today, as if it were a special gift, an Easter egg just before the Easter recess, if you will. They are oblivious to the fact that this was a hard-fought victory. The student loan bill sailed through the House but ran aground in the Senate, with a powerful combination of Sallie Mae and big bank lobbyists conspiring to influence key Senators. They hired from Senate staffs and Democratic lobby shops (Tony Podesta was the ringleader) and dumped millions into their campaign. They made up out of thin air a lie about 35,000 jobs being at stake. They seemed to get the upper hand as health care dragged on.

At the risk of sounding immodest, really only one organization bothered to fight back on behalf of students against banks, at a time when everyone else was consumed with getting AEI’s favorite health care bill across the line. That happened to be this website. And within a couple weeks of action, with students and college advocates, the Democratic leadership shifted from leaving the student loan title out of the reconciliation bill to including it. Tom Harkin and George Miller get a lot of credit for that, but really there was one group pushing from the outside at that time. (CAF jumped on later.)

And so the only progressive bill passed by Congress so far this year, the only progressive bill we’re going to see for the rest of the year, stayed alive thanks to the woman popularly described in the liberal blogosphere as the devil’s spawn. Somehow advocating against bank subsidies and for students escaped the rest of the progressive infrastructure. At least someone was there doing the work.

So you’re welcome.

David Dayen

David Dayen