U.S. Senate passes law to seal loan loopholes

by Mark Henle | 10/13/04 5:00am

In a recent move, the Senate unanimously passed legislation to close loopholes that had allowed student loan companies to collect interest from the federal government at a rate of up to 9.5 percent.

The decision, which came on the heels of a vote last Thursday of 414-0 in the House, should save the government at least $270 million in the coming fiscal year.

The loopholes had allowed loan corporations to collect over $1 billion in subsidies since the mid-1990s. While lenders theoretically could have passed the profits onto students in the form of lower-interest loans, the bill ensures that this money will go toward improving the nation's education system.

The money saved will help pay down the outstanding loans of math, science and special education teachers who commit to working in low-income school districts for a minimum of five years.

Sen. Judd Gregg, R-N.H., chairman of the Senate's Health, Education and Labor Committee and the bill's sponsor, praised Congress' unanimous approval of the measure and the sealing of the costly loophole.

"This will provide an opportunity for school districts in places like Concord and Manchester, where there are a high number of high-need schools, to attract and retain highly qualified math, science and special education teachers," Gregg said.

Dartmouth students also admired the spirit of the bill but were skeptical of its ability to improve public schools significantly in low-income areas.

"Being from a low-income area myself, I think it's a good idea; but I don't think they'll fix the real problem, which is the difficulty of attracting and retaining teachers with significant experience," Minkun Zhang '07 said.

While President Bush has not yet signed the bill, the White House had voiced its support for Congress' efforts as recently as last month.