Student loan bill clears Senate panel

June 11, 1993|By N.Y. Times News Service

WASHINGTON -- The Senate Labor and Human Resources Committee has approved a modified version of President Clinton's proposal to put the federal government in the business of lending money directly to college students.

The plan, which is now almost certain to be enacted in some form, is intended to cut costs both to students and to the government, which now acts as a guarantor of student loans made by private financial institutions.

The most immediate saving would be to students, who now pay fees of as much as $80 for every $1,000 borrowed. Under the bill, those fees would be cut in half, whether the loan was coming from the government or from a bank.

The president had proposed that private lenders be eliminated entirely from the government's student loan program. But the bill approved by the Senate committee yesterday was a compromise that would cap government lending at 50 percent of total student-loan volume.

One novel feature of the bill is that students could choose to satisfy government loans by paying the Internal Revenue Service a fixed percentage of their income for 20 years, or until the loan was repaid, whichever came first. Thus, not every loan would necessarily have to be fully repaid.

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