White House Calls for Student Loan Bill

From Yahoo! News: The Associated Press reported that last Saturday President Bush said the recent credit crisis is threatening the availability of student loans. His administration is doing what it can to help with emergency loans for new students for the upcoming fall semester but called to Congress for authority to do more.

Bush threw his support behind a House-passed bill that would grant the Education Department greater temporary authority to provide loans to students unable to secure ones from banks or other lenders. A similar measure by Sen. Edward M. Kennedy, D-Mass., is pending in the Senate. He has also told Congress to get the new legislation on his desk as soon as possible. With college students needing to secure loans for the fall semester, there is no time to waste.

Earlier this month the legislation passed the House in a 383 to 27 vote.

The House bill would raise limits on how much borrowers can receive under the federal program. It also tries to encourage parents to take out federal loans for their children’s education. The bill would allow parents to defer repayment of those loans until after their children leave school, which is currently not allowed.

The recent problem stems from dozens of lenders that have stopped making loans under the federal program that subsidizes and backs low-interest loans. Some students relying on private loans, which are not federally backed and can carry high interest rates, have had trouble getting those nonfederal loans due to those lenders. The lenders make up an estimated 13 percent of the student loan market. Read more…