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Video related to this article is available below.Issue date: 4/13/07 Section: News
Capitol Hill tackles student loan issue
Democratic legislation aims to curb problems; college affordability an issue for '08 elections
Paul Richards
As the investigation into the student loan industry continues, politicians, higher-education organizations and University administrators are expressing hope for the future of student loans.
This discussion comes on the heels of the recent findings by New York Attorney General Andrew Cuomo, who revealed suspicious practices in the student loan and financial aid industries at universities around the country.
Penn, for example, was found to have an undisclosed revenue-sharing agreement with Citibank. Other schools implicated in the case were found to have deeper ties with lenders, including officials who held stock in aid programs they were recommending to their students.
Since then, on Capitol Hill, where legislators have long been discussing college affordability, Sen. Edward Kennedy (D-Ma.) is working to hold the student loan industry more accountable.
"The senator wants a complete overhaul of the system," said Kennedy spokeswoman Melissa Wagoner. "There's no oversight in the private loan system as it stands right now."
One of the ways he hopes to do that is through legislation like the Student Loan Sunshine Act introduced by Kennedy and Sen. Richard Durbin (D-Il.) on Feb. 1.
This act would require full disclosure of all special arrangements between lenders and universities; forbid any gifts from lenders to college employees worth more than $10; require that universities explain why a lender is placed on their preferred lenders list; and encourage students to use government loan programs before turning to private lenders.
The student loan issue is even permeating the 2008 presidential race.
"We need to fix the student loan program to take banks - which are just an expensive middleman - out of the process and focus on making sure young people aren't crushed by debt by the time they leave college," presidential hopeful John Edwards said in a campaign statement. "We should make all loans directly from the Education Department, like a quarter of college loans are already."
This discussion comes on the heels of the recent findings by New York Attorney General Andrew Cuomo, who revealed suspicious practices in the student loan and financial aid industries at universities around the country.
Penn, for example, was found to have an undisclosed revenue-sharing agreement with Citibank. Other schools implicated in the case were found to have deeper ties with lenders, including officials who held stock in aid programs they were recommending to their students.
Since then, on Capitol Hill, where legislators have long been discussing college affordability, Sen. Edward Kennedy (D-Ma.) is working to hold the student loan industry more accountable.
"The senator wants a complete overhaul of the system," said Kennedy spokeswoman Melissa Wagoner. "There's no oversight in the private loan system as it stands right now."
One of the ways he hopes to do that is through legislation like the Student Loan Sunshine Act introduced by Kennedy and Sen. Richard Durbin (D-Il.) on Feb. 1.
This act would require full disclosure of all special arrangements between lenders and universities; forbid any gifts from lenders to college employees worth more than $10; require that universities explain why a lender is placed on their preferred lenders list; and encourage students to use government loan programs before turning to private lenders.
The student loan issue is even permeating the 2008 presidential race.
"We need to fix the student loan program to take banks - which are just an expensive middleman - out of the process and focus on making sure young people aren't crushed by debt by the time they leave college," presidential hopeful John Edwards said in a campaign statement. "We should make all loans directly from the Education Department, like a quarter of college loans are already."
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elaine
posted 4/22/07 @ 12:37 PM EST
I would like to know why politicians continue to push for new lender benefits for student loans, while older lenders such as mayself receive NO benefits, and pave the way to send these kids to school virtually scott free. (Continued…)
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