House ends aid to ACORN, reforms student lending
The ACORN vote, however, overshadowed the equally important bill to which it was attached: On Thursday, lawmakers also passed a serious overhaul of the student lending industry.
Under current law, the federal government guarantees about 97 percent of all risk student lenders assume through the Federal Family Education Loan Program (FFELP). But the bill that passed the House on Thursday would end those subsidies and permit the Department of Education to offer loans directly, effectively shutting companies like Sallie Mae out of the federal loan industry.
The change, lawmakers said, is motivated in part by fluctuations in the market, which have rendered some student loans insurmountable.
“The status quo student loan program that takes taxpayer money and
gives it to private lenders and then rewards them to take a risk, not
with their money but with ours, doesn’t make any sense,” Rep. Roberts
Andrews (D-N.J.) said on Wednesday during floor debate.