Student Loan Companies Battle Congress Bills
Bills To Slash Government Subsidies
Fought by Student Loan Companies
Angela Januzzi
June 27, 2007
The pair of bills approved last week by the Senate, which not only reauthorized the Higher Education Act but also cut a percentage of government subsidies for the federally guaranteed loan program, is being fought against by America’s Student Loan Providers.
The bills, while offering grant money to high-need school districts to support student teachers’ education in those areas, also would slash government subsidies for loan programs and force student-loan companies to pay more of the cost. The subsidy rate would be cut by five-tenths of a percentage point, and the group of student loan companies gathered representatives in Washington yesterday to speak out against the measure. The loan providers argue the bills will lead to a decreased amounts of lenders, and subsequent higher costs for borrowers.
Senator Edward M. Kennedy of Massachusetts, however, and those like him who approved the bill, argue that student lenders are already poorly served by a system of lending which favors lenders over students, and claims it's time student loan companies were forced to streamline their business strategies.