The changes you should know about
Starting on July 1, 2010 all federal education loans will be made through the new Direct Loan Program. This piece of legislation was the final budget reconciliation bill that carried over into the Democrats’ Health Care Overhaul, when President Obama signed it into place on Tuesday. What does this mean? It means no more mediators between paying for higher education loans and the government. The middle men of private banks and loan companies will be eliminated in dealing with federal student loans. This is being done to expand Pell grants and make it easier for students to pay off loans after graduation, instead of worrying about extra fees to the private loaners. It will save an estimated $60 billion of subsidies that would have otherwise gone to private loaners. Furthermore, there will no longer be private student loans facilitating federal funds, so many more loans will be coming directly from the government.
Where do we fit into all of this?
How does this affect me? The decision has been made to get rid of private student lenders so that more investment can be made towards Pell Grants, which are specifically for low-income families determined by the FAFSA. By 2017 the maximum Pell Grant should go from $5,550 to $5,975, while also dispersing 820,000 more grants by 2020. The new law also invests $2 billion into education and career programs at community colleges for trade adjustment aid, providing training to employees who have been laid off because of foreign competitors. This investment will be made over the next four years.
So what now? Don’t worry. The access to loans is still available, they are just coming from a different place. While the government can partially choose who we lend money from, they cannot (or haven’t yet) implemented a law saying everyone must wear a bow in their hair on Thursdays. That would just be ridiculous. At that point we might need to start worrying, when government control is so deep that it is visible in our appearance. But this, this is an opportunity for underprivileged families to send their kids to college and a way to invest in the future. It’s a way to save more and in turn give more to those in need.
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But what about the middle class who still needs help with going to college? Are we not just as entitled as those in the lower class. If the goal is equal opportunity, aren’t the other classes at a disadvantage now?