September 17th, 2009
03:38 PM ET
5 years ago

House passes bill nixing private lenders in student loans

WASHINGTON (CNN) - The House of Representatives on Thursday passed a bill that would overhaul the student loan system by ending a government-subsidized program for private lenders to provide college loans.

The House voted 253-171 for the bill that, if also passed by the Senate and signed into law, would effectively end the role of private lenders in making student loans. Instead, the government would become the sole direct lender for student loans.

The non-partisan Congressional Budget Office said the bill would save more than $80 billion over 10 years by halting the subsidies to private
lenders.

The House bill includes increased spending for Pell Grants for low- and middle-income students, as well as more money for community colleges, early-learning programs, school renovations, and colleges and universities that historically serve minorities.

Supporters hailed the measure as a key component of President Barack Obama's goal to make colleges and universities more accessible for all
Americans, especially those from low- and middle-income families.

"Today we have the chance to make the single largest investment in grant aid and other benefits to help more students graduate with less debt … while also cutting entitlement spending by $10 billion over 10 years," said Rep. George Miller, D-California, in introducing the measure.

Opponents called the bill a government takeover of the student loan system that would result in job cuts by lending institutions and reduced
choices for students seeking loans.

–CNN's Deirdre Walsh contributed to this story.


Filed under: House • President Obama
soundoff (70 Responses)
  1. Christian Values

    Now we need to nix private health care insurance providers too. They are responsible for mass genocide. They kill grandma for profit and ration care for cents.

    I'll take Ethics and Sense (Government) over Dollars and Cents (Private Health Care) any day.

    It's unchristian to pretend on sunday and then screw thy neighbor on monday. That's why I stopped being a republican, and became a democrat. The party that actually PRACTICES moral responsibility rather then like the republicans who only PRETEND to know about them.

    September 17, 2009 04:07 pm at 4:07 pm |
  2. Shawn from NH

    If it lowers the interest rate on student loans then I am for it. My son has a student loan for $25k for his FIRST year of college!!! At 8.9% interest with a private loan because we didn't qualify for a Stafford loan. My wife & I contribute $15K per year because that's all we can afford. We didn't save ahead of time because we were busy raising a family.

    September 17, 2009 04:07 pm at 4:07 pm |
  3. Sian Rose

    Thank you to the House of Representative. I am a student loan borrower how has also worked in the student loan industry. Having dealt with Direct Loans and private borrowers I can unabashedly say that this is one of the better things Congress has done in recent years. Never mind that the US Government now controls half of the banking indsutry anyhow!

    September 17, 2009 04:07 pm at 4:07 pm |
  4. Desmond Hayes

    Where is this goverment going to stop taking over business from private enterprise? There seems to be no limit to how much involvment "our" government has, or wants to have, in our affairs.

    If government was efficient, it would be more understandable, but government is not.

    September 17, 2009 04:08 pm at 4:08 pm |
  5. LacrosseMom

    Good, too many crooks out there taking advantage of desperate kids.

    September 17, 2009 04:10 pm at 4:10 pm |
  6. Centrist

    Smart policy towards greater efficiency and reduced costs, at the same time extending accessibility for advanced education. Keep up the good work!

    September 17, 2009 04:11 pm at 4:11 pm |
  7. Kevin

    Guess it goes to show how quickly a government can forget its own history.

    September 17, 2009 04:11 pm at 4:11 pm |
  8. Shawn from NH

    This may be the first thing that I may benifit from that Pres. Obama and his Congress has done. I'm part of the "rich" middle class that always gets penalized. We make less than $200K but more than $150K so never qualify for anything.

    September 17, 2009 04:11 pm at 4:11 pm |
  9. nwcanadian

    Government as the monopoly-everything. What a fiasco.

    September 17, 2009 04:14 pm at 4:14 pm |
  10. jpspec

    Dear Jack,

    I am a person who has been considered by friends as being rather opinionated. Maybe yes – maybe no. This is not important to the question that has been asked.

    With all that has gone on since the president has been elected, I have seen a strong lean to the left. Because of this, I have now reached the point that "anything" that involves more government I am against. I am an independent that now says: Just say no.!!!

    So much for following the news and becoming educated and informed.

    Presently the news has become extremely bias and not very informative. I have had to start to watching Fox news. Tabloid or investigated. Today this is a difficult question to answer.

    Phyllis, PA

    September 17, 2009 04:15 pm at 4:15 pm |
  11. DonnaLee

    Saving $$ is good. It lowers the deficit. Thanks Democrats.

    September 17, 2009 04:15 pm at 4:15 pm |
  12. ben

    it figures, the ones who have whined and cried about the gov't not cutting spending are the same ones who voted against this bill. no to education, no to savings, party of no.

    September 17, 2009 04:16 pm at 4:16 pm |
  13. John G

    If I can't get loans for next semester can I sue the federal government for being stupid?

    September 17, 2009 04:19 pm at 4:19 pm |
  14. lila

    I have no idea why our higher education cost so much these days. In Germany higher education cost about $500.00 a year. And they have highly respectable universities. It's good to get the loan cost down, but really, Our state schools need to cost far less over all.

    September 17, 2009 04:19 pm at 4:19 pm |
  15. Michael

    Amen.

    Now help those of us who have masive loans (in my case, law school loans) and am struggling to pay them on a government lawyer salary. Teachers are not the only ones who could benefit from forgiveness programs, so could city attorneys, district attorneys, public defenders and non-profit lawyers.

    September 17, 2009 04:20 pm at 4:20 pm |
  16. vince

    A terrific move in the right direction. The old loan program was set up as a gift to banks, this one will help students nationwide to get affordable loans.

    September 17, 2009 04:21 pm at 4:21 pm |
  17. bella

    I hope this bill passes in the house and is signed by President Obama! Why should private lenders get big bucks. Like all banks, these days, its just money, money, money$$$$$$. And further, it is great news that Pell grants will be increased, and most of all the college student will have LESS DEBT to pay back. College students who graduate after (4) or more years of college are beset with $50,000 and more debt to pay back. That severely limits what they can do with the money the get from any job they take. It could take years for them to pay back their debt.

    September 17, 2009 04:22 pm at 4:22 pm |
  18. Kimm

    I like this very much. This morning when I heard it was up for a vote I was skeptical, thinking the bank lobby pressure against would be great. I hope the darkness of recession has helped legislators understand they can and need to do more to help our young citizens obtain the education they need to compete in the world. If we don't help them the chain will be broken and once broken....

    September 17, 2009 04:22 pm at 4:22 pm |
  19. centerleft

    Good, now do the same for Medicare subsidizided programs to insurance companies in the tune of 17 billions a year. No more middlemen in student loans and health insuraunce. Bravo!

    September 17, 2009 04:23 pm at 4:23 pm |
  20. Hyman Minsky

    Another industry nationalized. Now, on to utilities!!!!

    September 17, 2009 04:23 pm at 4:23 pm |
  21. Justin

    Too bad this didn't happen a few years back...now Citigroup gets all my money.

    September 17, 2009 04:25 pm at 4:25 pm |
  22. Hyman Minsky

    And just think of the money that we will save on advertising, and promotion when we have Government Motors, Government Bank, Government Hospital, Government Television, Government Industries, etc.

    Want capitalism? Go to China!

    September 17, 2009 04:25 pm at 4:25 pm |
  23. Average guy in Kansas

    It's about time Congress began to fix a system that has burdened both students and taxpayers for many years. What's most surprising is that the House was able to stare down those lobbyists who insisted on allowing the banks and other private stakeholders to continue to line their pockets with taxpayer dollars.

    Now, let's see if the Senate has the same level of courage!

    September 17, 2009 04:26 pm at 4:26 pm |
  24. Lisa, Saugus MA

    Another government run program. How long will it be before corruption, pork, and just plain incompentance take over.

    It would have been better to just regulate the companies giving college loans. Capitalism is becoming a word that soon be be erased from the dictionary.

    Not change to believe in!

    September 17, 2009 04:27 pm at 4:27 pm |
  25. rachel

    There won't be a private anything soon.

    September 17, 2009 04:27 pm at 4:27 pm |
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