WITH PREDICTABLY self-congratulatory fanfare, the House passed a bill yesterday that Republicans say will close loopholes in a student loan law that have allowed billions of dollars of taxpayers' money to flow directly from the Treasury into the coffers of financial institutions, without benefiting students along the way. The Senate is poised to do the same. As we have written, the bill, proposed by congressional Republicans only recently, remains flawed, both because it is temporary -- the loophole would be closed for only a year -- and because it continues to allow banks to "recycle" the profits from current loans, create new loans using the money and still collect the high interest rate that Congress intended to eliminate more than 10 years ago.
The bill's backers argue, truthfully, that the elimination of the recycling provision would hurt nonprofit lenders that had already made financial calculations based upon it. Yet for-profit lenders stand to gain enormously if the loophole is left open.
It is not too late for Congress to fix this problem. Last month, the House voted in favor of an amendment proposed by Reps. Dale E. Kildee (D-Mich.) and Chris Van Hollen (D-Md.) that would close the loophole entirely, if only for a year. Bills that would shut the loophole permanently have been proposed by Sen. Edward M. Kennedy (D-Mass.) and Sen. Patty Murray (D-Wash.). Any of those measures can still be made into law. If congressional leaders think this change is important enough to be made rapidly, in the final days of this session, surely it is important enough to do it right.