Student Loans

Congress is considering a plan that would require banks and other lenders to compete for the right to make federally guaranteed student loans. The proposal, which has bipartisan support, would set up government-run "auctions" in which lenders would bid on loans based on the size of the government subsidy they would be willing to accept. Those lenders that agreed to the lowest subsidy rate would "win," earning the right to lend to students in a particular state, region,… more

House Democrats pushed through legislation yesterday that would boost government-subsidized student loans and other college financial aid by $18 billion over the next five years, despite strong opposition from Republican lawmakers and a White House veto threat.The legislation, passed in a 273 to 149 vote, would cut interest rates on federally backed student loans in half and increase Pell grants for low-income students. It would pay for the measures by slashing subsidies to lending companies by about $19… more

WASHINGTON, July 11 — The House on Wednesday approved far-reaching changes in student aid programs, voting to cut $19 billion in federal subsidies to student lenders over five years, while increasing grants for needy students and halving interest rates on federally backed loans with the savings...As well as cutting lender subsidies, the bill reduces the share the government would guarantee in the event of student default. It halves the interest rate on federally backed loans gradually over the… more

For months, leaders at the U.S. Education Department have battled the impression, fostered by Democratic members of Congress and New York Attorney General Andrew M. Cuomo, that the Bush administration did far too little to regulate the behavior of lenders and colleges until its hand was forced by the burgeoning scandal in the student loan industry...

Jeff Baker, who directs the policy liaison and implementation staff in the Education Department’s Federal Student Aid office, said at Monday’s session at the… more

WASHINGTON -- In their most aggressive action yet in response to problems in the student loan industry, U.S. Department of Education officials said Monday that they have sent warning letters to more than 900 colleges and universities reminding them not to limit student choice in picking a lender.The letter was sent to campuses where 80 percent or more of the federal student loan volume in 2006-2007 was handled by one lender.Jeff Baker, policy liaison at the… more

To the average student or parent, the college-loan fiasco that has unfolded over the past few months is as about as easy to understand as the federal tax code. Far clearer is the severity of the problem.Students pay interest rates of anywhere from 6.8% to 18% for college loans. The higher end of that range borders on usury. Repaying the average loan — $20,000 — over 10 years at the top rate costs more than twice that amount. more

Morning Edition, June 26, 2007 · A bill before Congress would cut billions in federal subsidies for the student loan industry and increase the amount of money available for needy students – with funding coming from the pockets of lenders. The industry is under assault after reports of unethical financial relationships between universities and private lenders.Loan industry defenders say the bill would favor lenders who don't have students' best interests in mind. Student advocates say money that now… more

Student loan banks and their allies are trying to spin away the public’s outrage over the discovery that private lenders have been bribing college aid officials to steer student business their way. The banks want to change the subject by criticizing the government’s separate direct loan program instead of looking at where all that bribe money comes from: You.

The government spends billions each year on unnecessary subsidies to banks that make student loans. It’s these excess taxpayer subsidies to private… more

The investigation of New York State's attorney general, Andrew M. Cuomo, into the questionable practices of lenders in federal student-loan programs has helped raise public awareness of one of the greatest scams in our government: The Federal Family Education Loan program, otherwise known as the guaranteed-student-loan program, is unnecessarily expensive, structurally broken, and rife with corruption. It is increasingly clear that our convoluted federal student-loan delivery system, through which private lenders provide government-backed loans to students, cannot be fixed by… more

Senate Democrats introduced a bill on Tuesday that would slash government subsidies to student-loan companies and use the savings to pay down a portion of the federal deficit and create two new grant programs aimed at helping low-income students attend college. The bill-- a "budget reconciliation" measure that will be considered by the Senate education committee today, along with legislation introduced on Monday that would reauthorize the Higher Education Act -- would also cap the amount of money… more