WASHINGTON — The House yesterday easily approved by a vote of 252 to 171 legislation that would eliminate the Federal Family Education Loan program, in line with the Obama administration’s push to require all federally guaranteed student loans to be issued directly by the federal government.
The legislation was introduced by Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee. While it will eliminate FFEL, it may preserve a role for some of the existing state-level nonprofit program lenders that issue municipal bonds. It will allow them to service direct federal loans originated within their respective states.
Supporters of the legislation have argued that it will save “tens of billions” of dollars in reduced borrowing costs, which could then be plowed into additional grants for students.
However, critics argue it would substantially increase the federal deficit and lead to the layoffs of thousands of employees within the student lending industry.
A Senate version of the bill has not yet been introduced, but is widely expected to pass through that chamber this fall through a fast-track parliamentary procedure known as reconciliation that would require a simple majority for its approval.