When the Supreme Court decides on Obamacare, college financial aid reforms could be affected too.
(Photo: Wikimedia Commons)

Here’s a little-noticed wrinkle in the Supreme Court’s consideration of the Affordable Care Act: college financial aid reform could also be at risk.

The Affordable Care Act (a.k.a. Obamacare) was passed using a reconciliation – a special legislative process used to consider budget bills. The Health Care and Education Reconciliation Act (HCERA), as it was known, included not only language reforming health care, but also the Student Aid and Fiscal Responsibility Act (SAFRA).

And what has SAFRA done? Quite a bit, it turns out:

• It ended federal subsidies to private banks for giving out federally insured loans. Now the Department of Education directly administers the loans, cutting out the “middle man” (private banks).

• It increased Pell Grant scholarship awards for low-income students.

• It let new borrowers cap the monthly amount they spend on loan repayment at 10% of their discretionary income, starting in 2014. (The current cap is 15%.)

• And after 20 years of timely payments, SAFRA says that any remaining loan balances are forgiven and the student’s debt wiped clean.

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So if the Supreme Court overturns the entire Affordable Care Act, that could jeopardize higher education policy, including all the student loan reforms. Private banks might love that, but today’s students (and would-be students) would be left out in the cold.

What to do? For now, we have to hold our breath on this. First, because perhaps the Supreme Court will put precedent and good policy before ideology, and uphold the Affordable Care Act. And second, because if the court does overturn the ACA, there’s no clear understanding of how this will impact the legality of the student aid provisions of the reconciliation act.

So stay tuned, and hope for the best!