As reported by the Wall Street Journal:
A bill, backed by the White House, to end private lenders originating federally guaranteed student loans passed in the House, but S&P said Friday it is increasingly unclear whether the Senate will vote on the legislation in the next few months.
Analyst Adom Rosengarten said it is likely both Nelnet and SLM, also known as Sallie Mae, may still be involved in the origination of federal student loans for at least another year, limiting the immediate impact that legislative changes would have on the companies."
Meanwhile Rep. George Miller, chairman of the House Education and Labor Committee appeared on CSPAN Newsmakers (at 15 minute mark of video) today and had this to say about the status of student loan reform (paraphrase below). As you will see, the legislation is still tied in with health care which means we still have weeks for this to play out. Rep. Miller did say he anticipated that the bill would be part of the same reconciliation package as health care:
"The legislation is the president's proposal to move from the federal student loan program to a direct loan program. Under the federal loan program, the loan agencies Sallie Mae and the banks make the loans, we guarantee them, they make the profit on the interest, we end up paying $8-9 billion a year in subsidies. When the credit markets crashed, it became clear that credit wasn't even available for government guaranteed loans. So we put in on emergency basis to directly give money to the lenders. That really makes no sense. The president has asked us to take that $8 billion going to the largest banks and Sallie Mae and recycle money on behalf of students, families and institutions.
We'll put $40 billion into Pell Grants, significant number of students return to school to get new skills for the new economy and for new jobs. Also put money for first time to help rebuild community college structure, more and more they are the focal point of job retraining, community efforts at economic development. We are putting $10 billion there. Also school construction at K-12 level and at community colleges also to help them expand capacity. Also put money into early childhood education, one of things we have learned students is the importance of students being exposed to high quality early education...an effort to take subsidies going to Sallie Mae and the banks and put them in on behalf of families and our education policy in this country.
House has passed it, it is in the reconciliation bill...assume it will come out as part of reconciliation package with health care and the higher ed bill and hopefully the Senate will put it in, I think the votes are there to put it in that package and pass it and send it to the President's desk. Lots of lobbying by Sallie Mae and the big banks...
It would be in same reconciliation instructions.. we were instructed by the Budget Committee to save some money and we did that. I think there is $7 billion of deficit reduction...part of our reconciliation package when it goes to the Senate.
Whether they would add other sweeteners to reconciliation (e.g., a jobs bill): "It is really difficult to do under the rules. We had some preliminary discussions about a month ago about that and we were exploring that. I don't what the conclusion was...not sure whether they would qualify or not."
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