House Plans To Boost Student Loans

New Bill Would Increase The Amount Students Can Borrow From The Government

(AP)  The House on Thursday backed a measure aimed at ensuring that students get college loans amid the turmoil in the credit markets.

Passage of the bill on a 383-27 vote comes as worries mount that the tightening credit markets, stemming from the subprime mortgage crisis, could limit financial aid for students.

"Families deserve every assurance that we are doing what we can to make sure that they will continue to be able to finance their children's college education, regardless of what happens in the credit markets," said Rep. George Miller, D-Calif., who chairs the House education committee.

Dozens of lenders, making up an estimated 13 percent of the market, recently stopped making loans under the federal student loan program, in which the government subsidizes and backs low-interest loans.

The departure of those lenders hasn't resulted in students being shut out of the program. Other lenders have stepped in, or the students have received loans through a smaller program in which the Education Department makes the loans directly to students.

Some students relying on private loans, which are not federally backed and can carry high interest rates, have had trouble getting those nonfederal loans. Bank of America said Thursday it plans to join the ranks of lenders that have stopped issuing private loans, though it plans to continue making government-backed loans.

The House bill seeks to address that problem by raising limits on how much borrowers can receive under the federal program.

The bill also tries to encourage parents to take out federal loans for their children's education. The bill would allow parents to defer repayment of those loans until after their children leave school, which is currently not allowed.

Home owners and people who are behind in medical bills also would get some relief under the legislation. The bill says short-term delinquencies in mortgage or medical payments should not prevent otherwise eligible parents from borrowing money for college.

The legislation would give the Education Department authority to buy up loans from student lenders to ensure they have access to capital and can keep issuing loans.

Lenders, and some lawmakers, say more action is needed in this area. Some have urged Treasury Secretary Henry Paulson to consider using a Treasury financing agency to pump cash into the student loan market so lenders will make new federally backed loans.

The bill passed in the House on Thursday is similar to legislation introduced in the Senate by Sen. Edward Kennedy, D-Mass., chairman of the Senate Education Committee.

Students are just starting to line up financial aid packages for college this fall. Experts say the impact of the credit crunch on the student lending market probably won't be entirely clear until this summer.

[swwils]

I think that the Government should guarantee the people at least the option of two years of college,or two years of the military.It would be a choice either two college,or two military.This way they would have no problems getting military quotas,and we would have plenty in college.This would make a much smarter work force running our country,that includes politics.

[Syndicate]

I think this was part of McCains economic plan. I would like to see Two year mandatory military service. Like Israel.

[sistatee-2009]

Maybe it''s time to stop all student financial aid and let the colleges sit there with empty classrooms and no money for the professors. The tuition would drop shortly thereafter.

[kansas1946]

Really. Where exactly are they going to get the money? Bush has run the well dry and then some. (trillions)

[sharncedar]

"would give the Education Department authority to buy up loans from student lenders to ensure they have access to capital "

Another billion dollar giveaway to the big investors and banks. The banks make bad loans, the government buys the loans from them. Our government will soon be holding all the bad debt from every unscrupulous lender. Prudent and honest lenders will be drivne out of business. There will be many more bad loans, the government will have to step in and guarantee and buy more and more of them.

This is insane. These people are insane. It would be much cheaper to subsidize higher education than to buy all these bad loans.

Our government officials are like people on crack, they have horrible judgement, they do everything for the short term like putting band-aids on serious wounds. I wonder if these people even understand basic economics or good governance. They make Bush look smart. This is rolling into a disaster fast- the worst thing you can do is try to grease up the bad loan system to try to get a little more juice out of it - IF PEOPLE CANT PAY THE LOANS BACK the system MUST collapse. You can''t make bad debt good by more borrowing. This is insane. Like crack heads.

[mcvet]

No! Say it isn''t so!! Is our Congress FINALLY going to do something for AMERICAN''s?? Just have to wonder if the Little Nazi will veto it though... gotta believe he will. Helping American''s is not real high on his list of priorities...well unless they make more than 200,000 a year and contribute to the fascist party. Sieg Heil Bush

[hungry1968]

Considering that the "predatory lenders" are now pulling their garbage in the college loan industry, charging interest as high as 28%, maybe the government should just completely take over the college loan business entirely.

Then they could charge enough interest or one time fees to cover the operating costs of the program, the students would get the cheapest rates possible, they would get educated, and our workforce ends up better for it, then so does our economy.

[cbutler69]

Its nice that they are going to raise this amount, but something else needs to be fixed if you want to help students and ensure they will be able to pay back the debt of school. My daughter is $18000 in debt for school, she wouldnt be if the colleges didnt make students take classes they dont need. If they were to take the classes-ONLY the classes they needed would help. They wouldnt spend as much on college and debt, the would get out of school sooner and wouldnt be wasting an extra two years in school taking classes they DONT need. I saw this waste for myself. ?This is really a waste of time and money, if you changed that these kids wouldnt be in debt as deep as they are.

[payasyougo]

So the answer to rising college costs is to make more loan money available...

[drputt45]

Here in TX, the tuition used to be regulated, then the state legislature in its wisdom de-regulated so competition would take care of affordable college costs. What a nightmare, it all went straight up. Within the last few weeks, Univ of TX announced another hike in costs.

So, now my kids can borrow more money to get the degree, then work the rest of their lives trying to pay off a loan similar to a house payment.

I agree with the comment that US students are required to take too many classes for a degree. They took history in elementary, middle school and high school and now have to take it again. Why?

If a student wants to be a scientist, why not just take the courses to get them there. High school prepared them to get to here, why repeat or add to what they know. Many other countries have the answer and we are falling behind.

[mjvw2]

I think that the Government should guarantee the people at least the option of two years of college,or two years of the military.It would be a choice either two college,or two military.

Posted by swwils at 08:26 PM : Apr 17, 2008

Your assuming that either the college or the military wants any of the 40% who drop out of high school. Neither wants anything to do with them.

[jjreding-2009]

I sure hope this goes through, since I''ve been at the federal limit and can''t borrow anymore money for school. I can''t get a private loan because I don''t have a co-signer, and the only loan available through the school itself isn''t enough to be able to go full time and still get the books I need. I was supposed to graduate early next year, but now I won''t be able to graduate until 2010 - unless this bill passes and I can get a regular student loan.

[stn_sage]

Well, this is good news! If this country can spend over $12 billion a month for murder, death, and destruction in Iraq, we should be able to spend a couple hundred million on human growth, knowledge, and job skills, right?!

Now, if the Senate can get off their lazy rearends and pass it---without botching it all up---maybe our worthless Congress can do something useful for a change!?

[candy-apple]

I''m just getting started on this with my son. I think the first expense that should be reduced for the kids is Dorm Fees. $3,000.00 per semester to share a dorm room, with upwards of three other people, who''s bathroom facilities are down the hall (some schools are now requiring that incoming freshman live on campus.) Which I think is BS, especially if there are family/friends in the area that the student can reside with for much lower costs. Without grants and scholarships kids are left wiht no alternative but student loans. They''re saddled with debt before they even start college. It seems like the more money we try to save for school the higher the costs get and the kids end up being the ones screwed. Of course, we could probably get more assistance if we weren''t American citizens.

[puzzler125]

The difference between "college" and "university" is the more well-rounded education you get in a university setting. I was required to take, and frequently I got to pick exactly which class, history, higher math, English courses, a computer class, statistics, philosophy, and many other general education classes to get a degree in film history. I am VERY glad I had such a wide variety of classes which I would not have chosen to take at the start of my college education. Now that I am about to graduate I cannot believe just how much I have learned in many different areas and every single class has enhanced my education! Here comes grad school...

[puzzler125]

P.S. The history I was taught in high school was so superficial that I didn''t really learn very much. Being able to choose between medieval history, European history, World War II United States history, and other choices, I could select exactly where I felt my education had been lacking. Sure there are students who don''t want to take math, English, science and social studies again and they have a choice. It''s called technical or vocational school. College is not for everyone.

[swwils]

MJVW2---I''m presuming off fact.When I was stationed in Germany,this is what the Germans were doing.When you turn 18,or 17 whatever age they where using.A person had the choice 2 years in the military or college,or I guess jail that was the options.Most of the nationals that I knew had no problem with this,so it must have been working.I''m sure it isn''t flawless because nothing is,but we have to begin somewhere.

[swwils]

The government could foot the bill for college,if the individuals have a certain GPA,such as a B average.Uncle Sam should pay all fees to college for those people.That would make kids work harder in High school so they could get in college without their parents selling body parts in the black market.15,000 for a kidney.20,000 for a lung.But don''t worry kids you can go to college,Daddy will be all right.

[keithle1]

You don''t have too many options. Can''t just have a high school diploma. Go to college/university. Learn a trade. Or join the armed forces.

What else can you do?