The Senate approved sweeping student-loan reforms Thursday, including the elimination of subsidies for banks to make federal loans.
The legislation was passed along party lines on a vote of 56-43. The bill, which also enacts reforms approved by the House as part of the massive health-care overhaul, was passed under the filibuster-proof reconciliation process.
However, the House must reconsider the legislation to resolve parliamentary issues raised by Senate Republicans, who all opposed the legislation.
The bill essentially puts Sallie Mae and other big student lenders out of the business of making federal loans. Some lenders can keep their servicing contracts with the government, but the legislation removes the guarantees banks had received to originate loans under the Federal Family Education Loan Program. Instead, the government will become a direct lender.
A projection by the Congressional Budget Office estimated the legislation would save the government roughly $60 billion over 10 years — lower than a previous $87 billion estimate.