The single holder rule for student loan consolidation is under heated discussion these days in the American Congress. The larger context is provided by the passing of bill HR 609 through the two houses of the Congress. This actually means a reevaluation of the old Higher Education Act and its adaptation to the current profile of higher education in the United States and to the budgetary needs of the American government. HR 609 is of interest to many categories of students because it refers to financial aid, to regular student loans and to state grants for those coming from low income families and for those with disabilities. There is almost no student enrolled in higher education in the US whose life is not affected by HR 609, whether they are aware of it or not. Many student organizations are trying to have their voice heard in the debate on HR 609 and this is a sign that students are becoming more and more aware of their financial interests. The press too has contributed to the enlarging of the scope of the debate on HR 609. This bill is no longer an obscure HR 609, but it is the bill on education that could change the conditions of student loans and could repel the single holder rule.

Why is the single holder rule so important to public opinion in the US and especially to students and their families? The repelling of the single holder rule can ease the financial burdens of many students and recent graduates. The cancellation of the federal single holder rule would allow students to shop for more offers regarding student loans and to choose from more companies that offer plans of student loan consolidation. Under the single holder rule, students could only consolidate loans if they contracted all of the loans from the same agency. In fact, this usually means the government (because consolidation applies generally for loans offered through government sponsored financial deals). The private companies can offer deals similar to consolidation also, but the single holder rule would have a direct impact on the more numerous deals with the federal financial agencies. The government is interested in keeping the single holder rule because this would ensure that more students are constrained to having all their loans from it.

The federal single holder rule is under discussion within the larger framework of the HR 609 bill, which brings up other details of loan consolidation. One of these is whether loan consolidation should come together with a fixed unified interest rate, as it was the case until now, or whether the rate should be flexible, as stipulated under HR 609. The corporations offering student loans, as well as the government as a lending agent, would be interested in having a new flexible rate, as stipulated by the text of the new HR 609 bill. This means that there will be significant lobbying in favor of the passing of HR 609. These pressures will affect the fate of the federal single holder rule too.

The fact that the single holder rule and the flexible rates issues are discussed together does not mean that they will be passed or forgone together. In fact, the nature of law-making allows for some parts of the bill, such as the one about the flexible rates, to pass, while others, such as the one about repelling the single holder rule, to fail. However, it is interesting to follow how the two will be connected in the congressional debate. It would be in the best interest of the students to repel the single holder rule while keeping the fixed rates as well.

On the other hand, the strong lobby from the corporations is likely to favor flexible rates, while perhaps agreeing with the single holder rule. Whether the corporations support the single holder rule or not depends greatly on the way in which this rule is interpreted. If the bundles offered by the companies are considered to have similar standing as governmental loan consolidations and the lending company offering the bundle can be equated to the government as a single lender, then the corporations will support the maintaining of the single holder rule. What we see until now though, is quite the opposite. The companies have been supporting the passing of HR 609, which implicitly means that they have been supporting the elimination of the single holder rule.

It is tempting to see all the discussions about HR 609 and the repelling of the single holder rule as a test for the American government. The debates about the bill will fundamentally be debates about the extent to which education is allowed to become a business more and more. On one side, there are the students and their families who are struggling with the high costs of education (many of them being completely left out from the educational process). On the other, there are the financial corporations that have found a new niche of activity in the domain of education. The companies offering student loans are not in this business because they are doing community service. They are in this banking business because it is a lucrative activity and a quite safe one because of the governmental guarantees. This is another fight between the many and the mighty. The only problem is that, in this case, the judge is a Republican government who seems to be engaged on a path of favoring big business.