Hey kids, good news! Student loans will become cheaper under a bill approved last week by the Senate. H.R. 2669, passed 78-17, will recast the Department of Education as Robin Hood, diverting money from lending companies to students.

The Senate bill will:

Cut subsidies to lenders by $18 billion;

Boost direct aid to students by $17.4 billion;

Raise the maximum Pell grant allowance to $5,400;

Cap loan repayments at 15% of the borrower’s discretionary income (read: beer fund);

Automatically forgive loans after twenty years.

From the Washington Post:

Lending companies said the legislation was a backdoor effort to drive some companies out of business and force borrowers to use a federal program, strongly supported by Democrats, in which the government lends directly to students.

Yes, lending companies, the bill might undercut your business model of obscene interest rates and draconian collection practices. We think this is a great bill that deserves to be enacted into law, but before that can happen, the House and Senate need to meet in a conference committee to hammer out the few remaining details.

Senate Approves Overhaul of Student Loan Program [Washington Post]
H.R. 2669 – Higher Education Access Act of 2007 [THOMAS]
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(Photo: DanielVF)

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