When the U.S. House of Representatives passed historic health care reform on Sunday night, it also altered the student loan industry, eliminating roughly $60 billion in federally subsidized lending to students with direct lending by the federal government to college students.
The health care bill, and its student loan component, await the signature of President Obama and ratification in the Senate.
Federal officials quoted in news reports in the New York Times and other sources say the change will save money and make for a more efficient system. However, bankers in Wisconsin say financial institutions will likely no longer offer student loans.
“It probably means that private banks will no longer offer student loans any more,” said Jason Busch, a spokesperson for the Wisconsin Bankers Association. “A lot of them have gotten out of it (before) anyway – there are so many guidelines they have to abide by. From our perspective, this is another example of government taking control of something that the private sector has historically been able to handle on its own.”
Marshall & Ilsley Corporation previously exited the student loan business, a bank spokeswoman said.
