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Washington
CUNA-sought changes included in student lending bill
WASHINGTON (8/1/08)—Two changes sought by the Credit Union National Association (CUNA) to a federal higher education bill were included in a Conference Report prepared for a final vote in Congress. The changes involve provisions in the original bill that could adversely affect university-sponsored credit unions. The bill, the Higher Education Opportunity Act, reauthorizes the Higher Education Act of 1965 for the first time since 1998, making significant amendments to the law that governs federal higher education programs, including financial assistance for students. The House and Senate have previously approved slightly different versions of the bill and a conference committee prepared a compromise “conference report” version of the legislation. The House approved the compromise Thursday and the Senate was expected to do the same as soon as last evening. The bill requires lenders and colleges to adopt strict codes of conduct for their student lending programs. A concern was expressed that the bill, as originally passed by the House, would prohibit a lender from using the name of the educational institution in marketing the lender’s private educational loans. “If enacted, this may have presented university-sponsored credit unions with a dilemma,” explained Ryan Donovan, CUNA vice president of legislative affairs, Thursday. “We sought and received language that should provide credit unions that are named for a university sufficient latitude to market their student loans-- provided that they do not imply that the loan is made by the university and not the financial institution,” he said. Also, CUNA won for credit unions an exemption to a 50% rule that the act granted national and state-chartered banks. Specifically, the bill imposes a 50% limitation stating that an eligible lender cannot have as its primary credit function the making or holding of federal student loans. Under the House-approved version of the bill, Federal Family Education Loan Program (FFELP) loans may not represent more than 50% of a lender’s consumer credit loan portfolio, including home mortgages. The bill provided an exemption for national banks with assets under $1 billion and CUNA secured that exemption for credit unions. The House approved the compromise bill Thursday by a 380 to 49 vote. The Senate was expected to consider the conference report on Thursday evening.


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