Have you heard about the current bills in the Senate dealing with student loans? Specifically, I’m concerned about the one called The Student Relief Act of 2007, which is really anything but… The Act claims it will make college more affordable and accessible by cutting the interest rates on subsidized student loans in half — from the current 6.8 percent to 3.4 percent. The Act would also reward colleges for steering more students to direct government loans instead of the government-guaranteed loans currently being served by private lenders.

I do know that some private lenders may have had shady relationships with colleges and I want to see that fixed, but the majority of private lending companies offer good customer service, while giving students and parents the most affordable loans in the marketplace. HR-5 passed in the House and is now in the Senate. What that bill and related bills, are really doing is squashing the budding mid-level and small private lenders who have accelerated competition in the marketplace by giving rebates back to the students and their parents.

HR-5 and related bills call for DOUBLING the fees to these lenders, pretty much putting them out of business or at the very least, taking the rebates that they offer their customers right out of those consumers’ pockets. Families working through one of these private lenders usually save thousands of dollars and for larger loans, tens of thousands of dollars. This bill, if passed in the Senate, will take that $10 billion, now being returned industry-wide to students and their parents annually, and give it to the federal government.

Even the claim that they are lowering the interest rate is not as it sounds. They are lowering the rate only on the subsidized Stafford Loans, which they pay the interest on for students with financial need only until the student graduates. Then, when the student starts paying on the loan, the rate goes right back up. The so-called savings are actually all smoke and mirrors and not a good deal for college bound students.

These bills also give the federal Direct Loan program, the right to offer incentives to colleges to ONLY work with them! Can you imagine a world with the federal government being the only game in town for student loans? Even before this story broke, I knew that this bill would not be a good thing.

NOW, we see how really horrific it would be. Please contact your state Senator and ask him to vote against the Student Relief Act of 2007. I don’t think many of the Senators who have voted for it could have read it. They would not want to put small private lenders out of business. These small lenders employ thousands of workers and offer a needed service to students and parents! Why would they think this is a good thing?