Capital Briefs: Vote on Easing Effect of Student Loan Cut

Lawmakers were expected to pass a bill late Friday that would partly compensate lenders for a cut in interest rates on guaranteed student loans.

The legislation would be in effect from July 1 until Oct. 1. Under the plan, the rate students pay would drop 80-basis points, but lenders would receive a 50-basis point federal subsidy.

The measure was included in transportation legislation scheduled to be approved by both the House and Senate. The provisions are intended to ensure loans are available for the fall semester.

Bankers have complained that an interest rate cut scheduled to take effect July 1 under a 1993 law would make loans unprofitable and have threatened to flee the program. The Clinton administration opposes any plan to compensate lenders for the lost revenue.

Senate Majority Leader Trent Lott said lawmakers will take up a long- term solution to the interest rate dispute after Congress returns from Memorial Day recess on June 1.

-Bill McConnell

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