WASHINGTON (Reuters) -- The Democratic chairman of the House Education Committee Tuesday introduced a bill to slash subsidies to student loan firms such as Sallie Mae and boost student grants.
The proposals come as Congress is considering numerous reforms to college student financial aid, and as federal and state investigators probe kickback schemes and conflicts of interest across the $85 billion student loan business.
California Rep. George Miller's bill represents a measured step toward compromise with Republicans over an issue that Democratic leaders want to wrap up soon, said Jaret Seiberg, a student loan industry analyst at Stanford Group Company.
"There has been a lot of pressure to get student loan reform done," Seiberg said, adding that if Miller gets his bill through committee, the outcome will be decided in the Senate.
Miller calls for a cut in a lender subsidy, known as the special allowance payment, of 0.55 percentage point. President Bush has proposed a cut of 0.50 percentage point.
Miller also proposed cutting lender insurance rates to 95 percent from 97 percent, in line with a previously passed House measure and Bush's fiscal 2008 budget proposal.
Source: CNN
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