US House Passes the Student Loan Sunshine Act

The US House has overwhelmingly passed student lending reform, 414-3. The Chronicle of Higher Education has a good summary:

Introduced in February, the Sunshine Act underwent significant revisions in the days leading up to the vote. While the original would have required college officials to disclose their conflicts of interest, the revised bill would seek to eliminate such conflicts altogether, in part by barring financial-aid officers from serving on lenders’ advisory boards or accepting staff support from lenders. It also would outlaw several practices that have been uncovered by parallel investigations in Congress and the New York attorney general’s office — including revenue-sharing agreements, which give colleges a portion of the profits on loans taken out by their students, and opportunity loans, which are pools of private loan money that lenders give to colleges to secure spots on their preferred-lender lists.

The Rock the Vote blog also has details.

Higher Ed Watch has the details on why this matters for your pocketbook and some ideas on how to solve the problem (beyond the Sunshine Act).

These measures alone are unlikely to get to the heart of the problem, which is that banks don't compete for student business. Instead, they jockey for a spot on colleges' "preferred lender" lists, virtually guaranteeing that colleges will funnel students in the direction of favored lenders, regardless of interest rates. There's no incentive to ensure that students get the best deal.