January 16, 2009

Subsidy-Rate Proposal in Bill Could Aid Lenders

By Kelly Field

Washington

Tucked into the 250-page economic stimulus bill introduced in the U.S. House of Representatives on Thursday is language that would temporarily change the way the government calculates the subsidies it pays to lenders that participate in the federal student-loan program, increasing their payment rate.

Under existing law, the subsidy rate is indexed to the rate at which banks lend commercial paper. Under the proposed change, the rate for the fourth quarter of 2008 would be tied

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