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House Takes Next Step On Student Loan Reform Bill

By Corey Boles, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The U.S. House of Representatives Wednesday approved a key procedural rule on a bill introducing sweeping reforms to the student loan marketplace.

A final vote on passage of the legislation is not expected until Thursday. Given the large Democratic majority in the House, the legislation is widely expected to glide through, but from there it's more uncertain what happens in the Senate.

The bill replaces private lenders as originators of student loans with the federal government, effectively ending the private market for student loan financing.

It will retain a role for private lenders to bid for a limited number of contracts to service loans after they are made by the federal government.

The anticipated savings that would be generated by the measure would be used to increase grants for lower income students, increase aid for minority students, provide more funding for community colleges, with a small portion left to pay down the deficit.

-By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com

  (END) Dow Jones Newswires
  09-16-091308ET
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