Bush signs bill boosting student aid; has loan code
WASHINGTON (Reuters) - Legislation that seeks to protect college students from lending abuses while boosting student aid was signed into law by President George W. Bush on Thursday as students across the United States prepare to head to college.
The bill requires lenders and colleges to adopt strict codes of conduct and would ban them from offering or accepting payments or gifts in exchange for making loans, a response to scandals uncovered last year involving kickback schemes and conflicts of interest between lenders and school officials.
"For the first time in years, students and parents will encounter a higher education system that is more consumer-friendly and that operates in the best interests of helping them pay for college," said Rep. George Miller, the California Democrat who chairs the House Education and Labor Committee.
The bill was passed by the U.S. House of Representatives and the Senate last month.
Other features of the bill include increased funding for graduate study at institutions that primarily serve minorities, new scholarship programs and support centers for military veterans.
Pell grants that go to low-income students will increase from $4,800 to $6,000 for 2009, and to $8,000 for 2014.
The bill follows other legislation passed during the past 11 months aimed at overhauling the student loan industry.
Last September, Congress passed a bill to provide an additional $20 billion in federal college loans to students over the next five years but slashed subsidies to lenders.
Lawmakers passed another bill in April to allow the Education Department to buy federal student loans from lenders unable to sell them on the secondary market, as a credit crunch stemming from the subprime mortgage crisis threatened student lending.
Major student lenders include Sallie Mae, JPMorgan Chase, Citigroup Inc, and Bank of America Corp, among many others.
The bill signed by Bush on Thursday also requires colleges that identify preferred lenders to provide students with information about why the colleges think the lenders' terms and conditions are favorable.
(Reporting by Georgina Coolidge; Editing by Tim Dobbyn)
