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GOP lawmakers protest ‘government takeover’ of student lending

A group of Republicans this afternoon will meet with reporters to protest the Democrats’ plans to eliminate tens of billions of dollars in government subsidies to private companies that lend to students. The Democrats’ bill would have students borrow directly from the U.S. Treasury, which makes sense to supporters because it’s the Treasury that currently assumes all the risk for those loans anyway — a boon to private companies that assume no risk. The Congressional Budget Office estimates that eliminating the private middleman will save $67 billion over the next decade, most of which will go toward expanding college scholarships to low-income students.

Obama student-loan reform would end lending-industry’s easy money

This week the finance industry reacted with alarm to sections of the Obama budget that would push the banking industry out from the center of the student-loan business and turn billions of dollars in private profits into scholarship money, aiming to cut corruption and lower skyrocketing student debt. The Obama plan is a version of reform plans that have been floated for years as abuses in the student-loan industry have come to light. The difference is that this one is likely to pass into law.