Murray introduces proposal to bolster college loans

Responding to reports that some lenders have stopped offering federal loans at community and other colleges, U.S. Sen. Patty Murray, D-Wash., and another Democratic senator introduced legislation Tuesday to prohibit lenders from picking and choosing among institutions.

Under the proposal, lenders that participate in the federal loan program would have to extend credit to any eligible student, regardless of such things as income or the number of years of education, as long as the college is part of the program.

The government already guarantees the loans at nearly full value.

Murray and Chris Dodd, D-Conn., introduced the proposal after several lenders stopped offering federally guaranteed loans at community colleges and some four-year institutions.

"Lenders offering loans backed by taxpayer dollars shouldn't be able to discriminate against certain schools or students," Murray said in a statement. "Denying loans based on school, program length or income level locks the door for far too many."

Lenders have said they were responding to the small number of borrowers and the small amounts borrowed at certain institutions. Financial-aid administrators countered that selective lending could make it harder for poorer students to pay for higher education. They argued that lenders participating in the program should not be allowed to cherry-pick.