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US lawmaker to back Obama student loan shake-up

Tue Jul 14, 2009 11:44pm EDT

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WASHINGTON, July 14 (Reuters) - The head of a key U.S. congressional panel will introduce legislation on Wednesday calling for ending a college student loan program that for years helped lenders such as Sallie Mae (SLM.N) thrive.

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The troubled Federal Family Education Loan Program, or FFELP, would be discontinued in July 2010 under a bill to be offered by Democratic Representative George Miller, chairman of the education committee of the House of Representatives.

Like a proposal made in February by President Barack Obama, Miller will call for conversion next year of all new federal student lending to the U.S. Education Department's "stable, effective and cost-efficient Direct Loan program."

That change would save U.S. taxpayers $87 billion over 10 years, said a statement from Miller's office.

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