TROY, N.Y.—President Barack Obama criticized the largest U.S. banks on Monday for trying to thwart legislation that would overhaul federal student loan programs.
He singled out in particular banks that have received bailout money from the federal government, saying they want to maintain the status quo on student loans because they get an "unwarranted subsidy" from it.
The U.S. House of Representatives last week approved legislation that would cut major banks and student loan giant Sallie Mae out of a large slice of the $92 billion university student loan business, shifting most lending into a program run by the U.S. Education Department.
The bill, strongly backed by Obama, will go next to the Senate for further consideration. Some Republicans criticized the bill as a government takeover of an industry that has served students well but Obama's fellow Democrats praised the House bill as a victory for students over banks.
"Ending this unwarranted subsidy for the big banks is a no-brainer for folks everywhere. Everywhere except Washington, that is," Obama said in remarks prepared for delivery at a community college in Troy, New York. "In fact, we're already seeing the special interests rallying to save this giveaway.
"The large banks —many who have benefited from taxpayer bailouts during the financial crisis — are lobbying to keep this easy money flowing. This is exactly the kind of special interest effort that has succeeded before and that we cannot allow to succeed again," he said, in fiery comments distancing himself from the banks.
Many U.S. students take on crushing debt loads to pay university bills that can total $50,000 a year or more at the country's private universities.