This week the House passed legislation, (HR 5186), to significantly expand loan forgiveness for math, science and special education teachers by eliminating millions of dollars in excess subsidies to private loan providers.

HR 5186 eliminates a provision in the Higher Education Act (HEA) that, since the 1980s, has allowed some lenders to receive a 9.5% return rate on federal student loans compared to the roughly 3.5% that most students pay. The bill would temporarily eliminate the subsidy – for one year- while lawmakers work on the HEA reauthorization. The Government Accountability Office recently estimated that the loophole resulted in $1 billion in overpayments in fiscal year 2004.

The legislation also helps address critical teacher shortages in math, science and special education by expanding student loan forgiveness. Currently, under the HEA, teachers who commit to high-poverty schools for five years may have up to $5,000 in student loans forgiven, and that number would be more than tripled to $17,500 under the House-passed bill.