Credit unions and banks today lost another round in the fight for control of student loans today when the House voted 253-171 to approve the Obama administration's plan to replace the Federal Family Education Loan Program with direct student lending.
Approximately 1,000 credit unions offer these loans but the Obama administration contends that by replacing them with direct lending will save $87 billion over 10 years.
The House Education and Labor Committee passed the bill 30-17 in July, mostly along party lines and the full House is likely to pass it. However, its fate in the Senate is less certain, since Republicans have more tactics available to them to thwart legislation.
CUNA and NAFCU argued that eliminating the program would make it harder for credit union members to navigate the student loan system and would negatively impact the relationship that credit unions have with their members.
"Credit unions that specialize in student lending provide a high quality service for their student members, and can provide much needed and individualized assistance if difficulties arise with regard to loan repayments. The elimination of FFELP will remove this valuable option for students," CUNA President Dan Mica wrote lawmakers.
"We have concerns that the legislation's move to an all direct lending program could create new challenges for credit union members to get the aid that they need to attend schools in the United States," NAFCU President Fred Becker wrote lawmakers.
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