August 15, 2008
Rescue Plan for Nonprofit Lenders May Have the Opposite Effect
A year ago, Congress rearranged the subsidies in the federal student-loan program in a way that was intended to give state agencies and other nonprofit lenders an advantage over their for-profit competitors. Nonprofit lenders, lawmakers reasoned, should be encouraged because they channel their earnings back to students, not stockholders.
The legislation Congress passed, however, may be producing the opposite effect.
Just two months after the Education Department announced a
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