Capital Briefs: Bill Offers Incentive For Student Lending

WASHINGTON - Sen. Nancy L. Kassebaum, R-Kan., is expected to sponsor legislation that would exempt banks, thrifts, and credit unions with less than $5 million in student loans from a costly audit required by the government.

Lenders turned to the Senate after a similar bill passed the House last Thursday on a 219-to-208 vote.

"We've starting to meet with senators, and we're getting some good responses," said Monique Gaw, a lobbyist for the National Association of Federal Credit Unions. "We're hoping for some Senate action by the first weeks in September."

Industry officials say the high cost of the audit could deplete the profits made from student lending and push some institutions out of the market. A 1992 law requires lenders to complete the audit by Sept. 30.

House Education Committee Chairman Rep. William F. Goodling, R-Pa., who pushed for the exemption in the House, wants to take the legislation a step further. Using an education reform bill, Mr. Goodling plans to propose doubling the audit exemption to $10 million. The education bill, which also includes elimination of the government's direct loan program, will be voted on by the House in September.

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