College Student Loans Get Boost from New Health-Care Bill March 26, 2010
Hidden in the new health-care bill are some new college loan provisions
Much news has been made about the new health-care bill that passed the House on Sunday night. But another aspect of the bill that hasn’t received as much press will bring welcome news to families worried about upcoming college expenses.
The Student Aid and Fiscal Responsibility Act, which acts as a major deficitreduction initiative was joined with the health-care bill this past week. This new initiative prohibits private lenders from originating student loans and is being estimated to save the federal government nearly $7 billion a year and taxpayers $61 billion over 10 years. The bill is ending a 35-year legacy in which the government paid subsidies to encourage private lenders to grant loans to students — and then turned around and guaranteed the loan, doubling the cost for the federal government and in turn American taxpayers.
The most exciting part of this bill for families with college-aged children is that the billions that will now be saved will be recycled into the Pell Grant program. The Pell Grant program provides aid to need-based and low income undergraduate and post-graduate students. The program was projected to run out of money this year, causing panic among the 8 million students that relied on that aid to help them pay for college. Now, thanks to the new bill, the Pell Grants will increase from $5,500 this year to just under $6,000 by 2017!
The policy of financial aid will remain the same., Students will still apply for federal loans at their colleges’ financial aid offices but will now have the certainty of where their loans are coming from. Many students were left struggling during the 2008 credit crisis and were either denied student loans or watched their existing loans change lender hands multiple times, making the process not only frightening but confusing! These new changes should encourage all students and their families to meet with a college financial aid advisor to discuss their financial options to make sure they are receiving all of the aid available and the best possible college loan for their situation.
