Congress approves major student loan changes

Last week, Congress voted to cut private banks out of the federal student loan process. The law ends federal subsidies to private lenders, such as Sallie Mae, which ends the current system where banks reap the profits and taxpayers subsidize the losses. The new law also will make it easier for people to pay back their student loans, by reducing the portion of income that a borrower has to commit to repayment. This change doesn’t go into effect until 2014, though. Predictably, banks and their Republican allies lobbied hard against the changes, although the government has indicated it will hire many of the same banks to service the loans.

Student Loan Overhaul Passes Congress | New York Times | March 25, 2010