Twenty-eight-year-old Maureen Wanous walked around Capitol Hill on Tuesday with a clear message for lawmakers: No one should end up like me.

The single mother from Owatonna is three years into her education at South Central College in Faribault and expects to graduate with $55,000 in student loan debt. She traveled to Washington with hundreds of other students to advocate for major changes to the student lending process.

"It's wrong that we have to be $55,000 in debt when we go to school," said Wanous, who works four jobs to stay afloat. "That's just crazy."

The U.S. Senate voted Thursday on key fixes to the massive health care bill that includes an end to government guarantees and subsidies of private bank loans for college tuition. Instead, the government will expand its program of direct lending to students.

The nonpartisan Congressional Budget Office estimates that bypassing the private sector will save $61 billion that had gone to private lenders. A good portion of that money will be funneled to the cash-strapped Pell Grant program.

Republicans say the bill will result in thousands of lost jobs in the student lending industry.

"When you go from having 30,000 jobs in the private sector -- $70 billion of private capital -- to slashing those 30,000 jobs, making government jobs or a smaller number of contracted private jobs, it looks and sounds a lot to me like a government takeover," said U.S. Rep. John Kline, the Lakeville Republican who has emerged as his party's spokesman against the provision.

Kline warned that having the federal government supply more initial capital for loans could add to the nation's debt burden, even though the vast majority of student loan dollars are repaid with interest.

Democrats contend that it's already a federal program and that they are just cutting out the middleman. "We can do it, and we don't have to give banks profits in order to do it for us," said Sen. Al Franken, a major supporter of the provision. "Basically what we do now is we guarantee the loans. And so there's no risk to the bank and they get the profit."

Little impact here

For Minnesota students and banks, the immediate impact will be minimal. Borrowing caps and interest rates will remain largely the same, and students will still supplement government loans with those from private lenders.

For many Minnesota students, direct lending is already the status quo. Subsidy cuts and the economic crisis have pushed many lenders out of the government-backed loan business -- including most every Minnesota player except for Wells Fargo, which declined to say how the new lending regulations will affect it.

The University of Minnesota was ahead of the curve, ditching private lending about a decade ago. Macalester College made the switch in 2008. "The direct lending program is less confusing and has proven to be very efficient in getting students the money they need," said Macalester's financial aid director Brian Lindeman.

Other schools are more skeptical of a government-run system. Rod Oto, director of student financial services at Carleton College in Northfield, Minn., said he is unsure student complaints will be handled effectively. "Any time you have just one player in the house, it's almost natural to become lax," Oto said.

So how did this overhaul of student lending end up in the health care bill? The provision passed the House in 2009, but had little chance of being approved in the Senate. When Senate Democrats turned to a tactic called "reconciliation" to pass fixes to the health care bill under a simple majority, they included student lending in the package because the special legislative route requires certain cost-cutting measures. • 202-408-2723 • 612-673-7293