Student Loan Bill Could Drastically Alter Education ARM Industry

Congress is slated to debate a bill today that would fundamentally change the student loan industry. The “Student Aid and Fiscal Responsibility Act of 2009” proposes changes to Federal student loans that would impact independent debt collection agencies, borrowers and institutions of higher education across the country.

Under the bill, which was passed out of the Education and Labor Committee in July by a 30 to 17 vote, after July 1, 2010 all Federal student loans will be placed under the Direct Loan Program. In effect, the bill would kill the popular Federal Family Education Loan Program (FFELP). The new student loan system would remove the middle men in loan servicing and collection, making the Department of Education (ED) creditor, processor, servicer, and collector of all Federal student loans.