Although most political talk in recent weeks has centered around the health care debate, Obama’s other piece of legislation may also have some helpful results, especially for college students.
The new bill will eliminate middlemen in the student loan system, putting the responsibility of providing low interest loans on the government.
The positives of this shift include an increase in Pell grants, which will be raised to a maximum of $5,500. Before this reform was signed, Pell grants were to be reduced by more than 20 percent, to $2,150. The shift also eliminates the subsidies that the private loan sector gains from the government.
The whole plan has a projected $61 billion in savings over ten years, some of which will be put back into the federal loan program. It is extremely important for students to be able to go to college. With the rising cost of tuition in all school sectors, it is important for the government to step in and intervene.
This is a good first step in allowing students to go to college.
There will be more affordable ways for low-income families to be able to pay for children to go to school. It will also be easier to repay the loans, with loan forgiveness after 20 years instead of 25 years, if payments are made continuously.
This legislation puts the needs of students ahead of private lending corporations. In addition to the loan overhaul, $2 billion will be invested into community colleges to provide education and other career programs to workers who were put out of a job in the economic crisis.
The only downside to this new program is the loss of jobs in the private lending sector, projected at around 31,000. However, for the projected 820,000 students who will receive the much needed grants by 2020, the bill is well worth it.