The secretary of Education might not need to exercise this option, but just the fact that she could should inject confidence into the market, Senate aides say. The bill requires that government officials set prices for the loans that make this provision cost-neutral.
These loans are already federally guaranteed. The government wouldn't be buying subprime loans, for instance, "so this was an easier decision than some of the decisions Congress has been struggling with on mortgages, where we don't want the government validating bad lending decisions," Mr. Shireman says.
Support for the bill
The Ensuring Continued Access to Student Loans Act of 2008 was originally put forward by Rep. George Miller (D) of California, chairman of the House Education and Labor Committee. President Bush and Secretary Margaret Spellings have both voiced support for the legislation.