Legislation Eliminates Discrimination Amongst Student Loan Lenders

Senators Patty Murray (D-WA) and Chris Dodd (D-CT) introduced legislation to end the practice of student loan lenders cherry-picking which schools and colleges they want to lend to, even with federally-backed college student loans.

Several lenders in the Federal Family Education Loan Program (FFELP) have stopped lending to certain schools because of a low return on investment or a high default rate at some colleges amongst its students. These lawmakers stated that these practices keep students, particularly low-income college students, from participating in higher education. With the Preventing Student Loan Discrimination Act, these lawmakers hope to stop the unfair practice.

“Lenders offering loans backed by taxpayer dollars shouldn’t be able to discriminate against certain schools or students,” said Senator Murray, whose state of Washington has been affected by the discriminatory practice. “I applaud the efforts of lenders to continue to offer student loans at a very hard time for their industry, but when families are struggling to pay for gas, let alone afford college, these discriminatory tactics make the job even harder. Access to higher education is the key that opens the doors of opportunity for millions of Americans, but denying loans based on school, program length, or income level locks the door for far too many.”

Senator Dodd echoed the statement, “… We cannot stand by and allow these discriminatory practices to continue. No student should be denied their dream of a higher education simply due to the school they attend or their income.”

In the past few weeks, legislations have been passed to ensure that potential college students have access to higher education. Recently, President Bush signed the Ensuring Continued Access to Student Loans Act of 2008, which will reduce the need for students to take out more expensive private loans by increasing funds for the guaranteed, low-interest federal student loans.

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