U.S. Lawmakers Work to Streamline Student Loan Process

By: Associated Press
By: Associated Press

The Senate sought Tuesday to simplify the financial aid process for students and to cut down on conflicts of interest in the student loan industry.

In a 95-0 vote, the Senate passed a bill aimed at streamlining the financial aid process by creating a new, simplified financial aid application form. Critics say the existing one is too long, seeks redundant information and is confusing.

"This acts as a barrier to low- and middle-income students applying for the aid they need for college," said Sen. Edward Kennedy, D-Mass., and the chairman of the Senate education committee.

The Senate bill also seeks to stem conflicts of interest in the student loan industry highlighted by several investigations, including one led by New York Attorney General Andrew Cuomo.

The Senate bill spells out that banks cannot provide gifts to college financial aid officials or take them on expense-paid trips. Banks have sometimes doled out such perks in an effort to get on schools' preferred lender lists, the investigations show.
"Our legislation makes these practices illegal and protects students by ensuring that when a college recommends a lender, it's based on the best interest of students and nothing else," Kennedy said.

The legislation also attempts to hold down college costs by requiring the government to publish a list showing which schools' costs are increasing at a rate that is higher than that of comparable schools.

The Senate passed this bill just days after approving one that would cut subsidies to banks that make federally backed student loans. The savings would largely go to increasing aid to low-income students.

"Taken together, the Senate has done some very important things for low- and middle-income students and families, said Terry Hartle, senior vice president of the American Council on Education, a trade group for colleges and universities.

But Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, wasn't impressed. "I would characterize this bill as pretty uninspired," he said.

The legislation wouldn't do that much to simplify the student-aid process, Nassirian said.

To really do that, "It would require a very deliberate structural rethinking of how the existing subsidies would get distributed among students," he said.

The House also passed bills recently to trim subsidies to banks, boost aid to students and cut down on conflicts of interest in the student loan industry. Lawmakers in the House and Senate now must work on compromise bills.


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