In a rapidly shrinking job market, the new graduate faces unparalleled challenges in finding work. Even before the recession, the college internship operated as an intermediary step between education and employment. In April, however, the U.S. Wage and Hour Division released a Fact Sheet on the legalities of hiring unpaid interns, presenting criteria for prospective employers to meet before moving forward with intern employment.

The criteria brings prevailing labor laws into perspective, requiring that the intern “not displace regular employees,” that the internship be “similar to training which would be given in an educational environment,” and that the employer “derives no immediate advantage from the activities of the intern.”

According to a recent article in the New York Times, these requirements may hurt, not help, potential interns. Many companies and institutions that had previously offered unpaid internships cancelled their programs as a result of the Fact Sheet, or cut down on the number of interns they hired. The Times article highlighted the potential unfairness of access to unpaid internships by students who have the means to spend an entire summer without gainful employment. However, in an economic climate that offers few opportunities to young people, it’s hard to begrudge anyone a head start on a career.

The Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173) passed the U.S. Senate this week and is now headed to the President’s desk for signature.

The Act has significant implications for the student loan industry. The most significant change provides the newly created Consumer Financial Protection Bureau with authority over virtually all types of non-federal student loans, including those that for-profit colleges make to their own students.  The Bureau will have supervision over loans made by all non-banks and by banks with more than $10 billion in assets.

The Act also creates a separate student loan ombudsman position within the Bureau. The ombudsman position is designed to provide student loan borrowers with a central place for information and to seek assistance with concerns and/or problems.

Yesterday, the U.S. Senate rejected a House-sponsored amendment in a bicameral conference committee on the Restoring American Financial Stability Act of 2010 (S.3217) that would have mandated institutional certification on all private student loans.

This is a blow to many stakeholders in the private education loan world, of which most supported full school certification.

As shared in this blog in mid-May, the House-sponsored amendment would require providers of non-federal student loans to get colleges’ approval before they make such loans to students. The intention being to assure that borrowers turn to more-expensive private loans only after they have exhausted federal, state, and institutional grants or at least less costly federal student loans.

The Chairman, Senator Chris Dodd (D-CT), of the U.S. Senate Banking Committee stated, “the Senate cannot accept this provision..the Senate cannot agree to mandatory certification. I authored self-certification with Senator (Richard) Shelby (R-AL)…and it’s far too early in our view to make a judgment if we need something more.”

Dodd did note that the bill includes other “strong protections” for private student loan borrowers, including new Consumer Financial Protection Bureau (CFPB) oversight of private education loans and a new private student loan ombudsman to assist students who need help with their private loans.

Conferees are expected to continue to meet this week in hopes of finalizing negotiations so that the bill can be passed by Congress prior to the July 4 recess.

U.S. Representative John Adler (D-NJ) recently introduction legislation that would require higher education institutions to provide information to student loan borrowers about the benefit of creating a power of attorney or living will for financial, legal, and medical decision making in the event of the death, incapacitation, or disability of the signer or cosigner.

The new legislation (H.R. 5458) would cover both private and federal loans. In addition the bill would require any private education lender to clearly define the borrowers’ obligation, including the effect the death, incapacitation or disability of the signer or cosigner would have on any such obligation.  Finally if there is a cosigner the private educational lender would have to discuss the benefit of credit insurance that would protect the signer and any cosigner in the event of death, incapacitation or disability.

The bill has been referred to the U.S. House Financial Services and Education and Labor Committees.

Last week legislation (H.R. 5448) was introduced in the U.S. House of Representatives to push the statutory deadline for returning the federal share of Perkins Loan collection from October 2012 to October 2013.

The legislation is intended to address confusion about when the Perkins Loan Program is scheduled to end. The re-authorization of the Higher Education Act (HEA) took several years, during which original dates for distribution of loan fund capital and subsequent collections stopped being updated.

In addition, current language in the HEA (Section 466) calls for schools to return their federal share by October 2012 even though the latest re-authorization of the HEA reauthorized the Perkins program through fiscal year 2014 (Section 461).

Finally, the Obama Administration has sent clear signals that it is interested in changing the Perkins Loan Program, though no changes have been made to date.

Sponsored by Rep. Tim Bishop (D-NY) and John Spratt (D-SC) the hope is that, if passed, the  legislation will allow the financial aid community additional time to sort through the future of the Perkins Loan Program.

Last week the U.S. Senate passed the Restoring American Financial Stabiliy Act of 2010 (S. 3217).  The Act, with a vote of 59-39, is expected to strengthen regulations governing financial institutions and prevent the risky behavior that led to a near-collapse of the economy in recent years.

The debate on the Act in recent weeks included several proposed amendments that would benefit student borrowers and higher education institutions.

In a review of the bill it appears that none of the amendments proposed by higher education organizations were included in the final version passed by the Senate. This included proposals to include language that would move the Direct Loan Program under the asupices of a new Consumer Financial Protection Bureau, allow private loans to be discharged in bankruptcy, provide an exemption for Title VII and Title VIII from new Truth in Lending Act disclosures, and require school certification on private student loans.

It appears that the only higher education related language to be amended to the bill targeted the “swipe fees” that banks charge merchants to process credit- and debit-card payments. The fees average 1-2 percent of a purchase. The added language would result in lower fees paid by colleges when students use credit and debit cards to pay for tuition and books.

The Senate’s Act must now be reconciled with the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173), passed by the House last year through conference committee.