Congress nears agreement on student loan bill

WASHINGTON (Reuters) - The U.S. Congress was close to agreeing on a bill to cut federal subsidies to student loan firms and raise federal grants for students, lawmakers said at a House-Senate conference meeting on Wednesday.

"We are hopeful that we can move this important piece of legislation forward without delay and take advantage of the window before both the House and Senate recess for the Jewish holidays next week," Sen. Edward Kennedy, chairman of the Senate education committee, said at the conference.

The Massachusetts Democrat also said he and House Education Committee Chairman George Miller, a California Democrat, are committed to moving ahead on a second set of changes to the $85-billion student loan industry, to be dealt with separately.

That second set of measures will likely include a crackdown on questionable loan marketing practices at the core of recent scandals involving kickback schemes and conflicts of interest that have shaken the industry.

"That is an equally important piece of legislation and Chairman Miller has committed to working with us to complete action on that legislation in the next few weeks," Kennedy said.

Both the House and Senate have passed student loan reform bills in recent months. Lawmakers are conferring to resolve differences among the bills, Aides said discussion is centered now on how deeply to cut lender subsidies.

Once agreement is reached, the final bill will be sent to President George W. Bush for review. Bush also favors subsidy cuts, which would affect major student lenders such as Sallie Mae, Citigroup, Bank of America, JPMorgan Chase and others.

(Reporting by Kevin Drawbaugh)