September 17th, 2009
03:38 PM ET
14 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

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. Inderjit Prakash

    This is an excellent development.

    September 17, 2009 04:28 pm at 4:28 pm |
  2. Melissa

    Good. Its about time.

    September 17, 2009 04:28 pm at 4:28 pm |
  3. DAVE

    so now our govt. will be deciding which poor and misfortuned kids of there liking will get govt. backed (freebie) student loans????? oh goodie I am sure that the corruption of this will be given the name of whatever representative like the Maxine Waters scholastic oppurtunity loan who ranks up the food chain of the democratic party... this is going to be a real winner of a program....... we should know who funded POTUS's college education since he was so poor and had no student loans or scholarships...... this is just another handout by the obama administration on the tax payer dime.........

    September 17, 2009 04:31 pm at 4:31 pm |
  4. PA Voter

    OK...wait....wait.....wait. Here it comes! Let's hear all the Republicans moan and groan about saving billions of dollars. After all, money is being taken out of the kind and giving hands of private lenders and they can't collect all that wonderful intrest! Maybe our government, which already gives out and collects loans, can get that intrest!

    September 17, 2009 04:38 pm at 4:38 pm |
  5. Arvid Billingsley

    I can see where political affiliations can come into play in deciding who/what party/area of the country, etc would get approvals and who would not. This is not good.

    September 17, 2009 04:39 pm at 4:39 pm |
  6. Mark NJ

    Republican no no's ...yes no again! These guys are pathetic slime balls who are not interested in legistlating but only in creating an affront to confuse and lie to the american people. I will say to you now that a civil war will happen again in this country!

    September 17, 2009 04:39 pm at 4:39 pm |
  7. Diane Dagenais Turbide

    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....seems clear to me!

    September 17, 2009 04:43 pm at 4:43 pm |
  8. Truth-Bomb Thrower

    So if the democrats get their way, the government will be providing our access to healthcare AND our access to higher education.....which means you better be good little sheep and do exactly what big brother and the democrats say or you will get neither. Who says we're sliding toward socialism or, worst yet, a totalitarian society? What a silly notion.

    September 17, 2009 04:44 pm at 4:44 pm |
  9. Concerned

    Someone please tell me this is a joke and cannot happen in a free country?

    September 17, 2009 04:47 pm at 4:47 pm |
  10. Maryland

    It's interesting how there was no debate about this bill......So in essence, we have taken away the private industries ability to offer student loans. And now, loaning college funds to students is ONLY A PUBLIC OPTION!!!! and there was no debate? Where are the tea baggers screaming about the small public option in the health care plan? Why did they not scream and cry over this? Oh yeah, they dont know why they are screaming and crying, they just do what their owners (Hannity, Limbaugh, Beck) tell them to do.

    September 17, 2009 04:51 pm at 4:51 pm |
  11. Sharon

    Good. I would much rather the money actually went to American students instead of the greedy banks. Let's watch how fast the elected Repubs and banks try to swift boat this process.

    You know, anything that may actual help Americans is really low on the totem pole. After all, we can not afford the wealthy contributions like the corporations.

    September 17, 2009 04:52 pm at 4:52 pm |
  12. Randolph Carter, a real American

    Ruh Roh! Here come the cries of socialism. Never mind that it would save us money. How come everything is a "government takeover" to you folks? Have a nice day!

    September 17, 2009 04:53 pm at 4:53 pm |
  13. leo

    This is great! It's about time. Why should the govt subsidize the banks?

    September 17, 2009 04:54 pm at 4:54 pm |
  14. Too Much Government

    Okay, what's next ? Government deciding whom qualifies and what subject to major in. Free education for all immigrants.

    Is the goverment going to purchase all of the current outstanding student loans ? If so, I pay taxes and I owe over $30K, they can add that to the cost. It's makes about as much sense as government controlling student loans.

    In trying to ingore the parellels of Atlas Shrugged, it appears as those the Obama administration is following the blueprint.

    September 17, 2009 04:57 pm at 4:57 pm |
  15. ran

    Good. Another great example of giving our money to the people instead of Executives for multimillion $ salaries /bonuses.

    We need to do the same for Health care. Single payer non-profit universal health care is where the money goes for health care.

    September 17, 2009 04:58 pm at 4:58 pm |
  16. yuri

    Let's hear some whimpers from those hyenas-RL, AC, GB, LI, and MB.

    September 17, 2009 04:58 pm at 4:58 pm |
  17. Offend Equally

    and the slide continues..................should everything just be owned by the federal government?
    So now the government owns:
    – Car Companies
    – Banks
    – Right of determining salaries
    – student loans
    – wants health care
    THIS IS ALL IN UNDER A YEAR! Wake up people and say no!

    September 17, 2009 04:59 pm at 4:59 pm |
  18. Tina, NC

    Hope this passes! And please explain how the government cutting out the middle man (banks) is a government take over. My goodness, the Republicans call everything a government take over. All they are doing is directly giving the money out verses paying the banks to hand it out for them.

    September 17, 2009 05:11 pm at 5:11 pm |
  19. phoenix86

    One more piece of the US economy to be nationalized.

    September 17, 2009 05:12 pm at 5:12 pm |
  20. KU83

    Amen! It is about time. I was fortunate to earn 3 degrees, 2 of them graduate with very little loan. However, I have a child in college now and the cost are simply staggering and there is no way my child will be as fortunate as I was. I am glad that 9 billion more can go to students as opposed to lining the profits of the banking industry...yes the ones we bailed out only to have them spend billions on bonus pay...yes those crooks. Several years ago Senator Kennedy spoke out about this outrage. Pell grants have stayed almost flat while cost have gone up. This is great news, thanks to the members of congress who grew a spine to stand up to the banking industry. I think we should keep our kids home and in school and send the top execs from the banking and insurance industry over to the front lines in Iraq and Afganistan. I would be less of a loss for this nation's future when they came back with a flag drapped over them.

    September 17, 2009 05:12 pm at 5:12 pm |
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