Senate cuts college student lender subsidies

After that, the Senate and House would have to agree on a single bill before sending anything to the White House.

The Bush administration has proposed cutting subsidies at levels closer to the Senate bill than the House bill. The White House has said it will work with Congress on the issue.

The industry, led by financial giants such as Sallie Mae and Citigroup, is fighting change, saying the federally guaranteed student loans they handle are efficient and offer students and schools valuable services.

On the Senate bill, Eric Solomon, a spokesman for lending group Nelnet Inc. said, "This legislation will force significant portions of the private sector away from the student loan market ... This will limit choice."

The industry was thrown onto the defensive earlier this year by a scandal in which government investigators, led by New York Attorney General Andrew Cuomo, uncovered kickback schemes and conflicts of interest among many lenders and some schools and student financial aid officers.

Several major lenders and universities have since agreed to adopt a new code of conduct drawn up by Cuomo.