House-Passed Financial Reform Bill Has Implications for Colleges

The House of Representatives passed sweeping legislation on Saturday designed to toughen federal regulation of the finance industry, and the measure has significant implications for private student loans in two ways. First, it would ensure that all private student loans -- including those made directly to students by colleges and universities, for-profit and nonprofit alike -- would fall under the authority of the new Consumer Financial Protection Agency. Another provision in the legislation, sponsored by Rep. Jared Polis (D-Colo.), would require a lender providing a private student loan to certify with the prospective borrower's college that the student is eligible for the loan. The provision is designed to give colleges the opportunity to counsel borrowers to make sure they are aware of their other options.