Senate Student Loan Bill Would End Private Lender Loans -Source
By Corey Boles, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The Senate Health, Education, Labor and Pensions
Committee is drafting legislation that would end private involvement in making
student loans, according to a Senate Democratic aide familiar with the matter.
The legislation would be broadly similar to a version of the bill widely
expected to be approved by the U.S. House of Representatives on Thursday.
The aide said the bill would end the private-sector origination of student
loans, and instead establish the federal government as the sole provider of
college loans.
There would still be a role for private banks and other lenders to bid for a
limited number of contracts to service the loans after they are made by the
government.
The news will come as a blow to private lenders, which have been focusing much
of their lobbying efforts on the Senate where they had hoped a higher education
overhaul would retain a role for them in originating loans.
Chief among these is SLM Corp. (SLM), known as Sallie Mae, currently among the
largest providers of government-backed student loans, but also includes a range
of other banks, including Citigroup Inc. (C), Bank of America Corp. (BAC) and
SunTrust Banks Inc. (STI).
Assuming the HELP committee approves the bill once it's finalized in a few
weeks' time, there is still the chance the Senate legislation could be altered
to address concerns of moderate Democratic lawmakers whose support for the
measure would be crucial to its passage.
President Barack Obama proposed ending private bank lending in his initial
budget request to Congress in February. He suggested using anticipated savings
to increase grants for low-income students.
House Education and Labor Committee Chairman George Miller, D-Calif., set to
work writing legislation to enact the Obama proposals, and the House is slated
to hold a vote on the bill Thursday.
Until now, it had been unclear how the Senate was going to proceed. The aide
confirmed Wednesday that the HELP committee is broadly following the president's
agenda in its version of the bill.
Timing of a Senate vote remains unclear, although it could be taken up after
an overhaul of the health-care system.
-By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com
(END) Dow Jones Newswires
09-16-091834ET
Copyright (c) 2009 Dow Jones & Company, Inc.
|