Who Regulates the Student Loan Industry?

BY Business Desk  November 19, 2009 at 6:39 PM EDT

library; Flickr

Question: Who regulates the student loan industry to stop the practice of gouging young people with excessive interest charges added to their principal when they “defer” payment …the govt doesn’t pay the interest and the loans mushroom.

Paul Solman: As best I can tell, it’s the Department of Education. The main initiative to stop the “gouging” is a bill proposed by President Obama in the spring, passed by the House in September, and now making its way through the Senate. It would make all student lending a direct responsibility of the Dept. of Education, rather than what we currently have: a private student loan industry that’s federally guaranteed.