November 17, 2000

Lenders Sue Education Department for Reducing Costs of Its Loans

By STEPHEN BURD

A group of lenders has sued the U.S. Education Department, saying that the agency acted illegally when it reduced origination fees paid by borrowers in the direct-loan program and lowered the interest rate for those who made loan payments to the department on time.

In a lawsuit filed this month in U.S. District Court for the District of Columbia, lenders and the lobbyists who represent them accuse Education Secretary Richard W. Riley of flouting the law to give direct lending a

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