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U.S. House votes to stop giving money to private lenders to make college loans

The U.S. House has voted to stop giving money to private lenders to make college loans and put more into the government's own loan program instead.

Tom Petri, R-Fond du Lac, has spent more than 20 years pushing for this change. And Thursday, he joined Wisconsin's five House Democrats in voting yes.

Petri has long said the current system is a sweetheart deal for the participating banks.

He said they get all the profits from the college loans they make, while having taxpayers cover the loans that never get paid back.

The Congressional Budget Office says the change would save $86 billion over the next 10 years.

Under the new bill, most of it would be used for increasing Pell grants and Perkins' student loans and more federal funds would go to community colleges.

Private lenders would still administer the government loans. But large student lenders like Sallie Mae say they would have to lay off workers due to a decrease in business.

Paul Ryan, R-Janesville, said the change amounts to another government takeover of the economy and he said total spending could increase, thus adding to the federal deficit.

But Rep. David Obey, D-Wausau, says the bill would let more youngsters go to college.