The legislation was added to the health care overhaul moving though Congress, and passed the House on Sunday night by a vote of 220-211. If passed by the Senate, it will eliminate the role of private lenders in originating federal student loans, a change that the Congressional Budget Office estimates will save the federal government between $6 billion and $7 billion per year. For more than 35 years, the government has paid private banks billions of dollars in subsidies to encourage them to lend to students, then guaranteed the loans anyway.
Rep. George Miller (D-Calif. ), the chairman of the House committee that wrote the legislation, said that the bill is coming at no cost to tax payers because it is ending an existing federal subsidy. “Congress voted to stop wasting billions of taxpayer dollars to subsidize big banks, and start investing that money directly in our students and families,” Miller said Sunday night.
This will be one of the great parts of this bill if it survives the members of the Senate who rake in big bucks from community, regional or wall street banks.