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House bill extends federal protection of student loans
WASHINGTON (AP) -- Federal authority to protect student borrowers from getting squeezed by the current credit crunch would be extended a year under legislation passed by the House on Monday.
The measure, approved 368-4, continues the secretary of education's power to purchase loans from lenders in the federal guaranteed loan program when lenders are unable to meet demand. The current authority expires in July.
"Our rough economy is already dealing a huge blow to American families and we can't allow trouble in the credit markets to further price students out of a college degree," said Rep. George Miller, D-Calif., chairman of the Education and Labor Committee. "With market turbulence showing no signs of letting up, it's only prudent to make sure that students have every assurance that the federal student loans they need will be there next year."
The bill, which now goes to the Senate, prolongs provisions of legislation enacted into law last May aimed at ensuring that problems in the credit markets don't prevent students from getting college loans.
That act also increased limits on how much borrowers can receive in federally subsidized student loans, decreasing student reliance on more expensive private loans. It allows parents to defer loan payments until their children leave school.
Without the extension, said Rep. Rob Bishop, R-Utah, "students could attend college this year without knowing whether the financing would be there to attend college next year."
The legislation ensures that lenders continue to have access to capital to make new loans. Under the bill, the Education Department can purchase loans only when they carry no cost for the federal government.
It also extends the authority to allow guaranty agencies to carry out the functions of lender-of-last-resort at a school.
Copyright 2008 Associated Press. All right reserved. This material may not be published, broadcast, rewritten, or redistributed
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