Packing student loan reform with the healthcare bill

This sounds like a good idea to me.  I read that article, and here is the thing that jumped out at me:

The bill would end government payments to private, commercial student lenders, leaving the government to lend directly to students...Private banks had lobbied fiercely against the bill, which would cut off a longtime stream of revenue.

They are including the two together because otherwise, the student loan reform would have been filibustered.  This leaves me with two questions.  One, why on earth are we subsidizing private banks at all?  And two, why are Republicans against ending this ridiculous subsidy to the point that they will filibuster reform?  Aren't they pro-capitalism?  Capitalism, small government, and free markets does not include government subsidies.