UPDATE 1-Student loan upheaval prompts U.S. Congress action
April 9th, 2008 | by admin |(Adds committee action in paragraphs 3-4)
By Kevin Drawbaugh
WASHINGTON, April 9 (Reuters) - The $85 billion studentloan business is in turmoil and with millions of U.S. studentslocking in funding for the coming school year, Congress isscrambling to make sure enough money is available.
In another case of fallout from the mortgage crisis, somestudent lenders are having trouble bundling and selling offtheir loans due to a general paralysis in securitized debtmarkets, prompting lawmakers to take action.
A congressional committee on Wednesday approved abipartisan-backed bill that would let the U.S. EducationDepartment buy federally guaranteed student loans from lendersunable to sell the loans on the secondary market.
The U.S. House of Representatives legislation would alsolet the department funnel capital to state guaranty agenciesthat could then provide the loan money to colleges in need.
Other provisions in the legislation would try to get morefederal loan money to students and ease some payment terms.
“The turmoil in our nation’s financial markets has spreadto the federal student loan program,” said Rep. Howard McKeon,senior Republican on the committee and backer of the bill alongwith committee Chairman George Miller, a Democrat.
“This bill will begin to restore investor confidence,address liquidity shortages, and most importantly, provideassistance to students and parent borrowers,” McKeon said in astatement. Both he and Miller are from California.
