By Ezra Grant
There has been a lot of coverage regarding the historical Health Care Reform just passed by Congress, but lost in all the coverage is the Student Loan Reform bill, that was passed along with Health Care.
The measure, included the Health Care Bill is an effort that’s been in the making for over a generation, and focuses on
cutting out the middle man to save the government money. The system, as it is now has two ways of getting loans from the government to students. One way, is offering that money through private banks subsidised by the Federal government and the other way is getting the loans directly from the Education Department.
The reform included in the Health Care bill gets rid of the private banks, and in so doing, saving the Federal Government that money, which can now be put back into the education program including the Pell Grant, which is the main education program for low income students.
Some of the highlights of the Student Loan reform are;
- $2.55 Billion for minority serving Colleges
- $36 Billion for Pell Grants over 10 years
- $2 Billion for Community Colleges and career training programs.
- $1.5 Billion expansion of Repayment programs
- $750 Milion in College Access challenge grants
According to Paul Baskin, a staff writer for Chronicle of Higher Education speaking about the savings the government will incure by paying these loans directly to students said;
“Roughly about $8 Billion dollars a year is being paid in these subsidies to these banks to deliver these loans. It’s a complicated system and the Democrats have been trying to get rid of it for a while.
The bill was passed by the House of Representatives in October of 2009, but because of the rules of the Senate, Democrats felt they could not get the 60 votes needed for closure. The bill was included in the Health Care reform bill because of the Reconciliation procedure used to pass the fixes. The reconciliation procedure can only be used if there is a reduction in the Federal deficit, thus, cutting out the middle man means the Student Loan reform will not be adding to the deficit, and was included.
President Obama, in his weekly address said;
This reform of Federal Student Loan Programs will save taxpayers $68 Billion dollars over the next decade. And with this legislation, we’re putting that money to use, achieving a goal I set for America. By the end of this decade, we will once again have the highest proportion of college graduates in the world.
The reform also makes it easier for students to take out loans, capping the annual repayment for graduates to no more than 10% of their income.
The Health and Education Reform passed without any support from the opposition. All Republicans in congress voted no on the legislations.