Putting the Student Loan Industry on the Straight-and-Narrow

A year and a half after the scandal broke that student loan companies were giving kickbacks to college and university financial aid officers, Congress has finally passed a law clamping down on the $85-billion student loan industry. Under the Higher Education Opportunity Act, student aid officials are now barred from taking money or gifts from lenders, and they must accept loans from any qualified lender.
We say: It’s about time.

Congressman George Miller (D-Calif.), chairman of the House Education and Labo
r Committee, who sponsored the bill, had this to say about the drive behind the legislation: "Today’s students face daunting obstacles on the path to college, from skyrocketing tuition prices to predatory student lending tactics." (And how.) He adds that the law aims to "create a higher education system that is more consumer-friendly, fairer, and easier to navigate."

Much of the credit for the crackdown went to Andrew Cuomo, New York’s attorney general, who sparked the scandal with his investigation into the questionable practices by university financial aid officials that saddled graduates with unnecessarily high debt.

"This historic legislation allows the rest of the nation to follow New York State’s lead in cracking down on the deceptive student loan industry," Cuomo said.

So what does the new law mean for students? For one, if a university has lenders that it prefers to work with, it must clearly explain how those lenders benefit students. It also expands grant programs to help low-income and minority students pay for college, as well as attempts to address the issue of skyrocketing tuition by nearly doubling the amount of money students can receive from a Federal Pell Grant (to $8,000 a year). Probably one of the more intriguing requirements here, though: colleges and universities will have to specify why they need to increase tuition by filing regular reports to the Secretary of Education. It should be interesting to see how this law shapes the fiscal landscape of higher education in the coming years. 

Stay tuned…

Tagged as: Andrew Cuomo, college, Congressman George Miller, Federal Pell Grant, financial aid, Higher Education Opportunity Act, House Education and Labor Committee, predatory lending, Student loan scandal, Tuition

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