July 30, 2008 / 3:21 AM / 10 years ago

Higher education bill moves closer to passage

WASHINGTON (Reuters) - A bill that aims to protect college students from aggressive lenders moved closer to passage on Tuesday when U.S. House and Senate negotiators reconciled their differences on the measure.

The Higher Education Opportunity Act is expected to reach the House and Senate floors by Thursday, lawmakers said on Tuesday night after meeting on the bill. Each chamber previously passed its own version of the measure.

The bill would require lenders and colleges to adopt strict codes of conduct. It would also expand scholarship aid to students and increase funding for graduate study at institutions that primarily serve minorities.

In addition, the bill would boost college aid and support for veterans and military families by creating new scholarship programs and support centers for veterans.

“Today’s students and families face a number of challenges on the path to college -- from skyrocketing college tuition prices, to a needlessly complicated student aid application process, to predatory tactics by student lenders,” Rep. George Miller, a California Democrat and chairman of the House Education and Labor Committee, said in a statement.

The bill is a companion to other legislation passed over 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 let the Education Department 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 biggest loan program allows students to take out federally guaranteed loans from big lenders such as Sallie Mae and JPMorgan Chase & Co.

One of the largest lenders, Bank of America Corp, announced in April it would not offer private loans for the upcoming academic year.

The bill agreed to on Tuesday would ban lenders and colleges from offering or accepting payments or gifts in exchange for making loans, a response to scandals uncovered in the student loan industry last year involving kickback schemes and conflicts of interest between lenders and school officials.

In addition, colleges that identify preferred lenders would have to provide students with information about why the colleges think the lenders’ terms and conditions are favorable.

Editing by Peter Cooney

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