WASHINGTON – A bill that would eliminate the role of credit unions and banks in the guaranteed student loan program that easily passed the House last year has hit roadblocks in the Senate and could be doomed.
Several recalcitrant Democrats have joined with Republicans opposed to the bill, dimming prospects for its passage, one lobbyist told The Credit Union Journal last week.
The bill is opposed by credit unions, who see the guaranteed loan program as a safe investment, even as recent legislation severely reduced returns.
The timing of the bill is crucial because the legislation would require all colleges to use direct government lending for federal loans as of July 1. Currently, they can choose between direct lending and a federal program that guarantees student loans made by credit unions and banks.
Obama administration officials and their supporters in Congress say the bill would save the government $80 billion over five years that currently goes to credit unions and banks participating in the guaranteed loan program and those funds would be used to increase student aid through the government’s direct loan program.
