Bills Are Bad News for Lenders, Good News for Students

The bill for scandals that have rocked the student loan industry is about to come due.

Lawmakers in both houses of Congress have approved bills slashing the subsidies and other perks lenders get for providing low-cost, federally guaranteed student loans. And the lenders' pain will be borrowers' gain, as much of the savings will be diverted into grants and other types of financial aid that students won't have to pay back.

A reconciled version of the bill should reach the White House by the end of the summer, where it is expected to get the president's approval.

Conflicts of interest in the student loan industry have made it an easy target for budget cuts. Over the past several months, an investigation by New York State Attorney General Andrew Cuomo uncovered evidence that these companies showered employees at major colleges and universities with expensive gifts in exchange for sweetheart deals and preferential treatment. ...