Tucked into the Health Care Reform Bill is a massive higher education change: the government is now the only loan administrator of student loans, saving the government 61 billion dollars in subsidies to private banks. It also saves the Pell Grant award from being almost cut in half, and part of the savings will go to deficit reduction.
The government has cut out the middle man, the banks, saving money for the government and increasing the Pell Grant. Hopefully this will help students in the long run by providing more free money (Pell) and by cutting the Federal Family Education Loan Program (the private lenders subsidized by the Department of Education). The Direct Loan program will cut the interest rate and improve the odds for parental PLUS Loan availability. Certainly education financing needs continued reform in order to improve our national college graduation rates. The USA used to be number one in college graduation rates, but we have sunk to 10th. Hopefully these changes will help students financially to stay in college until graduation. President Obama signed it in Virginia today!
