Banks lost the battle but not necessarily the war Thursday when the House voted to stop subsidizing the companies' student-loan business. If the legislation becomes law, it would change 35 ways of doing business. That's a big "if" however.
The vote was largely along partisan lines in the House, 253-171. But it now goes to the Senate where the financial-services industry can now target its lobbying efforts even more intensely to stop the bill it roundly detests.
The legislation, the Student Aid and Fiscal Responsibility Act of 2009, would allow college students to go directly to the U.S. government to obtain loans instead of private banks, yanking a lucrative piece of business away from banks and Sallie Mae, the private company that dominates the student-loan industry.
Supporters of the bill say it would save the federal government more than $80 billion though opponents either say the savings would be far less or that the new approach would eventually wind up costing the government more money.
NPR's Audie Cornish explained the political and lobbying dynamics around the bill on Morning Edition /em> before Thursday's vote.
AUDIE: Under the bill, the Perkins Loan Program would be expanded to more students. And Pell Grant awards for low income borrowers would increase. School construction projects around the country would get a $4 billion boost. Community colleges could expect $10 billion for renovations and adult retraining programs. Additional money is slotted for other programs. It's a list that makes Republicans, like North Carolina's Virginia Foxx, wary.
REP. VIRGINIA FOXX (Republican, North Carolina): The bill creates nine new programs and increases the federal government takeover of early education, higher education, school construction, and more. It is an insidious intrusion into education at all levels by the federal government.
AUDIE: The health care debate has turned phrases like government takeover and public option into slurs on Capitol Hill, and industry lobbyists are seizing on the sentiment in the debate over students loans.
JEFF NOORDHOEK (Nelnet): Even last week, if you listened to the president address Congress, he made a very strong point that a fundamental part of his plan is that there's a public option and a private option to make the whole system better.
CORNISH: That's Jeff Noordhoek, the head of the student loan company Nelnet
NOORDHOEK: What they're doing is eliminating the private option. And that, I think, should be frightening for people, that we're all forced to go to the federal government to borrow to go to school.