President Bush is expected to sign legislation Thursday that would cut in half the interest rate on government-backed student loans. Those interest rate cuts would be paid for by reducing by $19 billion the subsidies the government gives to lenders like Sallie Mae. The legislation would also cap the amount of money a borrower must repay each year based on his or her earnings.
This information came out today as the consortium of banks who were going to buy Salle Mae, has been reported that they are going to back out of the deal. Sallie Mae estimates that this change in legislation would reduce their Net Income by 1.8 - 2.1% per year for the next five years.
