A r c h i v e d I n f o r m a t i o n

   FOR IMMEDIATE RELEASE                    Contact:  Kathryn Kahler    November 3, 1995                                   (202) 401-3026

Statement by U.S. Secretary of Education Richard W. Riley Regarding Reported House-Senate Deal to Cap Direct Student Loans at 10 Percent of Loan Volume

Outrageous! For months the lending industry has been lobbying Congress to keep a stranglehold on the highly profitable student loan business. Now, they reportedly have accepted a "compromise" that will assure special interests billions more in risk-free profits -- perhaps as much as $9 billion more -- and destroy the direct student loan program.

By capping direct lending at 10 percent of the national loan volume, the Congressional majority contradicts every stated goal of its so-called 'Contract with America': smaller government, less red tape, more competition and more choice for consumers. The fact is direct lending works for students, families and schools. And despite the claims of special interests, direct lending saves money for taxpayers.

As President Clinton said yesterday, "We should let the market work by letting the consumer decide." Each school should have the chance to choose direct lending. But special interests don't want competition. They want guaranteed profits. House and Senate Republicans appear to agree. The congressional majority would give special interests a monopoly over 90 percent of student loans.

This back-room sell-out to special interests shows just how out of touch this Congress is with the needs and dreams of the American students and their families.