ETF News

House approves higher education bill

WASHINGTON (Reuters) - Legislation that seeks to protect college students from lending abuses and expands scholarship aid was approved by the U.S. House of Representatives on Thursday.

Lenders and colleges would be banned from offering or accepting payments or gifts in exchange for making loans, under the bill, a response to scandals uncovered last year involving kickback schemes and conflicts on interest between lenders and school officials.

“All federal and private student lenders will be required to provide full and fair disclosures about the terms and conditions of the loans they offer,” Rep. George Miller, the California Democrat who chairs the House Education and Labor Committee, said during debate on the bill.

The measure passed the House 380-49 and the Senate is expected to vote on the bill as early as later Thursday. President George W. Bush would then have to sign the bill for it to become law.

Other features of the bill include increased funding for graduate study at institutions that primarily serve minorities and new scholarship programs and support centers for military veterans.

The bill follows other legislation passed during the past 10 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 capital crunch stemming from the subprime mortgage crisis threatened student lending.

The bill passed by the House on Thursday would require lenders and colleges to adopt strict codes of conduct and mandate that colleges that identify preferred lenders, provide students with information about why the colleges think the lenders’ terms and conditions are favorable.

Reporting by Georgina Coolidge; Editing by Tim Dobbyn