House Bill, Hearing Turn Up the Heat On Administration Over College Loans

Washington

The House gave overwhelming approval last week to a bill that would set new limits on the relationships between lenders and colleges participating in the federal student-loan program.

Meanwhile, Democratic lawmakers confronted Secretary of Education Margaret Spellings at an occasionally testy May 10 hearing by the House education committee, asking why she hadn’t used her influence to stop lenders from providing perquisites and financial incentives to college officials who steered business toward them. They also asked why the Department of Education hadn’t closed a loophole allowing lenders to overcharge the federal government for loans made in the program.

“At no time did anybody at the department pick up the phone and say, ‘You’ve got to stop it’?” Rep. George Miller, D-Calif., the chairman of the House Education and Labor Committee, asked Ms. Spellings, referring to lenders’ offering benefits such as cruises for college officials who administer student-loan programs or paying them to...