U.S. House panel backs Obama student loan overhaul
By Kevin Drawbaugh
WASHINGTON, July 21 (Reuters) – The $92-billion U.S. college student loan market would be fundamentally reshaped under a bill approved on Tuesday by a congressional committee, which sent the measure on to the full House of Representatives.
The bill would end the Federal Family Education Loan Program, the mainstay of a government-backed student loan business that once furnished handsome profits for lenders such as Sallie Mae, Student Loan Corp, JPMorgan Chase and Bank of America.
Most student lending would be shifted from FFELP to the Direct Loan program run by the U.S. Education Department under the bill, offered by Representative George Miller, chairman of the House Education Committee that approved it.
“By converting all new federal student loans to the Direct Loan program starting in July 2010, we will finally end wasteful taxpayer subsidies that are keeping a broken system afloat,” Miller said.
“We will insulate all federal college loans for families from future turmoil in the financial markets.”
The Miller bill mirrors one proposed earlier by the Obama administration. Analysts said final passage was likely in the House, possibly before its August recess.
If approved, the bill would mark progress in President Barack Obama’s broad push to overhaul financial regulation.