WASHINGTON – The House is expected today to pass sweeping reform of student lending, including the elimination of the guaranteed loan program which has been a profitable source of revenue for credit unions and banks.
The bill will replace the Federal Family Education Loan Program with the federal government’s own direct loans. It will retain a role for private lenders to bid for a limited number of contracts to service loans.The Congressional Budget Office estimates doing so would save taxpayers $87 billion over 10 years. The projected savings would be used to increase grants for lower income students, increase aid for minority students, provide more funding for community colleges, with a small portion left to pay down the deficit.
More than 1,000 credit unions participate in the guaranteed loan program.
Both CUNA and NAFCU have weighed in against the bill, but acknowledge it probably will pass.
