House Passes Huge Student Loan Overhaul

Move cuts out private lenders, saves the government $61B
By Kevin Spak,  Newser Staff
Posted Mar 22, 2010 7:15 AM CDT
Nancy Pelosi, Charles Rangel, and George Miller speak to the media in this file photo.   (AP Photo/Gerald Herbert, File)

(Newser) – The House passed a sweeping overhaul of the federal student loan program today, slipping it into its final amendments to the health care bill. The measure would call for the government to lend directly to students, rather than paying private lenders to lend out the money. By effectively cutting out the middleman, the legislation would save the government $61 billion over the next 10 years, the Washington Post reports.

Much of that money would go to rescue the underfunded Pell grant program, while smaller portions would go toward deficit reduction and various other Democratic education priorities. “You're taking billions of dollars in wasteful subsidies … and you're recycling that money on behalf of families and students,” said House Education Chairman George Miller. But Republicans and lending industry lobbyists oppose the bill, denouncing it as a needless federal takeover of the loan program.

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