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23
Feb

Student loan reform legislation is to be changed to help protect about 1,000 jobs at Access Group and Sallie Mae, two student-loan providers in Delaware. Sens. Tom Carper and Ted Kaufman want to change bring about this change.

Under the current legislation the Obama administration is pushing, the government would handle all federally subsidized student loans directly, eliminating middleman lenders such as Sallie Mae. That would save taxpayers billions in subsidies it had been paying for the private loans — money that could be redirected toward more loans.

Carper and Kaufman, both Delaware Democrats, wrote to leaders of the Senate Committee on Health, Education, Labor and Pensions on Friday, saying they’re concerned about the potential impact on Sallie Mae, which employs nearly 700 workers in Delaware.

They asked the committee’s chairman, Sen. Tom Harkin of Iowa, and its top-ranking Republican, Sen. Mike Enzi of Wyoming, to maintain a role for Sallie Mae “that recognizes the important services Sallie Mae has provided millions of students and mitigates any potential job loss in Delaware.”

They also made a pitch for Access Group, a nonprofit student-loan provider that employs 400 people in Delaware.

Reform legislation that passed the House in September would allow certain nonprofits to service loans. But Carper and Kaufman said the legislation doesn’t take into account the relationships that membership organizations such as Access have with their member schools. Access members are law schools accredited by the American Bar Association.

Carper and Kaufman asked committee leaders to include additional provisions that would allow nonprofit membership organizations to service student loans from their member schools across the country.

The nonpartisan Congressional Budget Office said the House bill, which passed 253-171, would save taxpayers an estimated $87 billion. The CBO says the figure could be much lower, $47 billion, when administrative costs and market conditions are considered. Rep. Mike Castle, R-Del., opposed the bill.

Carper and Kaufman said in their letter they support reforming the federal student-loan program and acknowledged the reforms could generate “significant new federal resources” for the Pell Grant program for low-income college students and other education initiatives.

They asked Harkin and Enzi to “remain open to hearing our proposals for reasonable modifications that will guard against job loss in Delaware without sacrificing necessary budget savings.”

Sallie Mae’s executives support alternative legislation that would achieve savings by putting the government in charge of raising capital for the loans while allowing Sallie Mae and others to continue making and servicing the loans.

They say the bill that passed the House would mean job cuts, though possibly less severe at the Delaware center, which specializes in private loans instead of government-backed loans.

Category : Loans News

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