Senate adopts ethics crackdown on student loan industry

Wed, Jul. 24, 2007

The Senate on Tuesday overwhelmingly approved a bill that bars student lenders from giving gifts, trips or other perks to college officials, with lawmakers citing recent investigations showing that loan companies had used such incentives to get colleges to steer student borrowers their way.

Passage of the legislation, on a vote of 95 to 0, followed by four days the Senate’s adoption of cuts, totaling nearly $19 billion over five years, in subsidies to student lenders. Much of that money would be used to increase federal grants for low- and middle-income students, and to offer loan forgiveness under certain conditions.

Taken together, the votes, along with earlier House passage of similar bills, reflect a notable loss of standing for the student loan industry in the wake of improprieties uncovered by Congress and New York’s attorney general.

“Our legislation will take steps to ensure that the student loan system is working in the best interest of students, by pursuing needed ethics reforms in the student loan industry,” said the chairman of the Senate education committee, Edward M. Kennedy, Democrat of Massachusetts.

The legislation also requires that colleges report annual growth in tuition and fees, and that the Education Department publicize the names of colleges whose increases outpace those of similar institutions.

Resource: http://www.nytimes.com/