WASHINGTON-A bill that would eliminate the credit unions and banks role in the guaranteed student loans program that passed the House easily 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 said.
The bill is opposed by CUs who see the guaranteed loan program as a safe investment, even as recent legislation severally reduced returns.
The timing of the bill is crucial because the legislation would require all colleges to use direct government lending as of July 1 for federal loans. 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.
