A proposal by congressional Democrats to have colleges certify students’ private loans, to ensure quality, will not happen. According to the National Association of Student Financial Aid Administrators (NASFAA):
The Senate rejected a House-sponsored amendment to the financial regulatory reform bill currently being negotiated in a bicameral conference committee that would have mandated school certification on all private student loans.
“The Senate cannot accept this provision,” said Senate Banking Chairman Christopher Dodd (D-CT). Dodd pointed to other “strong protections” for private student loan borrowers included in the financial reform bill such as new Consumer Financial Protection Bureau (CFPB) oversight of private education loans, a new private student loan ombudsman to assist students who need help with their private loans, and a new mandated study on the private student loan industry.
Most higher education and financial aid groups support the certification plan, believing that it would protect students from signing up for risky loans. Apparently Republicans on the Senate Banking Committee, particularly Sen. Richard Shelby of Alabama, refused to agree to the provision.