"Banks and other lenders who issue federal student loans have begun to scale back a host of borrower discounts after a new law took effect yesterday that cuts federal payments to the lending institutions," reports The Wall Street Journal. "Lenders have long used discounts to compete for borrowers of federal student loans, including Stafford, PLUS loans taken out by parents of undergraduates or by graduate students themselves, and federal consolidation loans. Feeling their profit margins squeezed, several lenders, including Wells Fargo & Co., Nelnet Inc. and Goal Financial LLC, eliminated many of their borrower benefits on new federal loans. Nelnet also reinstated origination and default fees on its Stafford loans, which were previously waived, of as much as 2.5%. And National City Corp., which had discounted the rate on its Graduate PLUS loan to 6.8%, raised the rate to 7.65% as a result of the new regulations, although this is still below the typical market rate of 8.5% for Graduate PLUS loans. Lenders are making the biggest cuts in their federal consolidation loans, which typically have the slimmest profit margins."