WASHINGTON, Nov 15 (Reuters) - A U.S. congressional committee on Thursday approved a bill to crack down on deceptive marketing practices in the $85 billion student loan industry, while urging colleges to restrain tuition inflation.

The House of Representatives Education Committee adopted the measure by a vote of 45-0 after scandals involving kickback schemes and conflicts of interest among lenders and some college officials embarrassed the industry and academia.

Under the bill, lenders and colleges would be required to adopt codes of conduct on loans; students and parents would get more information about borrowing; and, for the first time, colleges would be explicitly pushed to rein in tuition hikes.

“This bill includes meaningful steps to hold colleges and universities accountable for excessive tuition increases,” said California Rep. Howard McKeon, the panel’s top Republican.

Committee Chairman George Miller, a California Democrat, sponsored the bill and said it “would help colleges rein in … price increases by providing them with incentives.”

Swift House floor passage is expected by aides from both parties. The Senate has already passed similar legislation.

But the House and Senate versions differ, and with the holidays near, reconciling them into a single package to send to President George W. Bush may take until early next year.

On Sept. 27 Bush signed into law reform legislation that slashed federal subsidies to lenders such as Sallie Mae, Citigroup and many others. It did not directly address unsavory marketing practices.

Many lenders and schools have adopted codes of conduct in settlements with New York Attorney General Andrew Cuomo, whose inquiries showed some lenders gave college officials gifts and travel in exchange for favorable treatment.

The House and Senate bills would set such codes of conduct into law.

Both bills would give students more information about borrowing, while also shortening and simplifying the complex, five-page, 100-question standard aid application form. Both bills would also try to rein in the galloping rise in college costs.

The House bill calls for the government to publish a yearly “Higher Education Price Increase Watch List” of schools with above-average tuition and fee increases. Schools named on the list would be required to explain the reasons for their price increases and develop cost-containment plans.

Similarly, the Senate bill proposes publicizing names of colleges whose cost increases outstrip those of their peers.

The House bill would reward schools that hold tuition hikes below average levels with more need-based aid.

By Kevin Drawbaugh (Editing by John Wallace) From: www.reuters.com

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