By Kevin Drawbaugh
WASHINGTON, July 20, 2007 (Reuters) - The U.S. Senate voted on Friday to cut federal subsidies to college student loan firms, such as Sallie Mae, by $18.3 billion, redirect savings to student grants and ease some student loan repayment terms.
The bill, approved by a 78-18 vote, would cut interest rates for student borrowers, provide loan forgiveness for graduates pursuing certain public-service careers, and cap loan repayment installments at 15 percent of monthly income. It also would make more students eligible for loans.
The annual maximum level for Pell grants, a key part of America's complex student financial aid system, would go up in stages to more than $5,000 a year from $4,310 under the bill.
At its present level, a Pell grant covers only about a third of the roughly $13,000 annual total cost of attending a public university full-time as an undergraduate, and even less of the $30,000 annual cost of going to a private school.
College expenses have soared in recent years, with the result that two-thirds of students today get some form of financial aid, such as grants, scholarships and loans.
The Bush administration has proposed cutting subsidies at levels closer to the Senate bill than the House bill. The White House has said it will work with Congress on the issue.
The industry was thrown onto the defensive earlier this year by a scandal in which government investigators, led by New York Attorney General Andrew Cuomo, uncovered kickback schemes and conflicts of interest among many lenders and some schools and student financial aid officers.
Several major lenders and universities have since agreed to adopt a new code of conduct drawn up by Cuomo.
WASHINGTON, July 20, 2007 (Reuters) - The U.S. Senate voted on Friday to cut federal subsidies to college student loan firms, such as Sallie Mae, by $18.3 billion, redirect savings to student grants and ease some student loan repayment terms.
The bill, approved by a 78-18 vote, would cut interest rates for student borrowers, provide loan forgiveness for graduates pursuing certain public-service careers, and cap loan repayment installments at 15 percent of monthly income. It also would make more students eligible for loans.
The annual maximum level for Pell grants, a key part of America's complex student financial aid system, would go up in stages to more than $5,000 a year from $4,310 under the bill.
At its present level, a Pell grant covers only about a third of the roughly $13,000 annual total cost of attending a public university full-time as an undergraduate, and even less of the $30,000 annual cost of going to a private school.
College expenses have soared in recent years, with the result that two-thirds of students today get some form of financial aid, such as grants, scholarships and loans.
The Bush administration has proposed cutting subsidies at levels closer to the Senate bill than the House bill. The White House has said it will work with Congress on the issue.
The industry was thrown onto the defensive earlier this year by a scandal in which government investigators, led by New York Attorney General Andrew Cuomo, uncovered kickback schemes and conflicts of interest among many lenders and some schools and student financial aid officers.
Several major lenders and universities have since agreed to adopt a new code of conduct drawn up by Cuomo.