Congress Adjusts Policy on Student Loans

[smirkymonkey]

http://news.yahoo.com/news?tmpl=story&u=/ap/20041009/ap_on_go_co/student_loans

WASHINGTON - Congress is ending a promise to banks that has allowed them to reap billions of dollars in profits from a federal college aid program.

Legislation halting the federal guarantee of a 9.5 percent rate of return to lenders of certain student loans was passed Saturday by the Senate and sent to President Bush (news - web sites). The bill, endorsed by the White House, won approval Thursday in the House.

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Democrats favored a permanent fix but reluctantly backed the one-year version to fix what both parties call a loophole. They complained the Republican version still leaves open a way for banks to recycle profits from current loans and then create new ones that promise the large government payments.

"No one should be fooled," said Sen. Edward M. Kennedy (news, bio, voting record), D-Mass. "Half of the student loan loophole that this bill leaves wide open goes to for-profit corporations like Nelnet and Sallie Mae. We should be helping students who are eligible for Pell grants, instead of subsidizing big banks needlessly."