Senate Passes Student Aid Package

Yesterday it seemed that the corporate loan sharks would get a cut in their subsidies reduced when Ben Nelson (D) of Nelnet's home state, Nebraska, introduced an amendment to reduce the subsidy cuts by $3 billion. Good news--the amendment failed, and late last night, the bill passed. A few details from the N. Y. Times:

. . . .Like the House measure, the Senate bill eases the repayment burden for student borrowers. It limits monthly payments on direct student loans to 15 percent of a graduate’s discretionary income and offers complete loan forgiveness after 10 years to public service employees.

It raises the maximum Pell grant more than the House bill did, to $5,100 by next year and $5,400 by 2011. And it creates a category of stipends, Promise Grants, which would make up the difference between Pell grants and any family or college contributions to cover the full cost of attendance for the neediest students.

Arguing that the bill would jeopardize small and medium-size companies, lenders tried to stave off some cuts through a last-minute amendment sponsored by Senators Ben Nelson, Democrat of Nebraska, and Richard M. Burr, Republican of North Carolina, that would have cut the loss of government subsidies to lenders by about $3 billion.

Supporters maintained that the amendment would have eased the pain for lenders without sacrificing aid to needy students. But critics, backed by a report by the Congressional Budget Office, disputed that claim. The measure was defeated, 61 to 36.

Both the tone of the debate and the results of the vote reflected the decline in fortune of the student loan industry after inquiries by Congress and the office of Andrew M. Cuomo, the New York attorney general revealed improprieties in the industry. . . .