Private lenders are pushing to break up the government's near monopoly in the $100 billion-a-year student-loan market.
The banking industry's main lobbying group, the Consumer Bankers Association, is pressing for the government to instate caps on how much individual graduate students and parents of undergraduates can borrow from the government to cover tuition.
That would force many families to turn to private lenders to cover portions of their bills. While that could mean lower interest rates for some, it could constrain funding to households with blemished credit histories.
A group of investors also is lobbying for legislation to provide a clearer legal framework for "income-share agreements," under which private investors provide money up front to cover tuition in exchange for a portion of a student's income after school. Firmer rules would help spur more agreements, the group said.