Big Changes Coming to Student Loans
Buried deep in the controversial healthcare bill are provisions that promise to make big changes to the student loan industry.
By eliminating taxpayer subsidies to corporate middlemen who marketed and originated federal student
loans, the Obama administration says it will raise more than
Here are some answers to the most important questions students and parents may have about the new loan landscape:
How will the new student loan reform bill affect students wishing to take out federal loans for college?
Most student borrowers won't notice much difference, since most of the changes are behind the scenes. If anything, the new system will be simpler and less confusing. Starting
How will the new student loan reform bill affect parents wishing to take out a federal PLUS loan?
The bill could make things easier for many parents. Starting
How will the new student loan reform bill affect graduates attempting to pay back their loans?
It will make it easier for future graduates to pay back their student loans. Starting with federal student loans taken out in 2014, future graduates will be able to sign up for an "income-based repayment" plan that will cap their monthly payments at 10 percent of their income. Anyone paying back federal student loans now can sign up for the current IBR program that caps payments below 15 percent of a graduate's income.
How will the new student loan reform bill affect students who need financial aid?
It will make more grant money available to more students. By stopping subsidies to private companies that made Stafford loans, the federal government will raise money that it will use to fund more and bigger Pell grants, which typically go to students from families earning less than about
Will this reform really cause the loss of up to 31,000 jobs, as its opponents (mostly private lenders) claim?
No. This is just a shift in who makes the loans. Since, if anything, the demand for federal student loans is likely to increase, there will still be plenty of need for workers to process and handle the loans. The federal government is already arranging to contract with many of the existing loan companies to service the future loans. The only significant layoffs are likely to be among the salespeople who lobbied colleges to choose a private bank as a "preferred lender." As painful as that will be for the individuals, that's a savings for students because it means there is no more incentive for the kind of kickback arrangements that led to recent scandals, notes
Is this a federal "takeover" of the student loan program?
Only a little. Until now, the federal government guaranteed the private lenders that made Stafford and PLUS loans that it would repay
Available at Amazon.com:
- Getting Into Graduate School Made Tougher by Recession
- Five Minority School Districts In Running for Broad Prize
- How to Pick the Best College for You and Your Wallet
- 8 Big Mistakes Online Students Make
- Online Certificate Programs Offer Fast Track to New Career
- No Child Left Behind & Reform Killing Public Education
- Big Changes Coming to Student Loans
- Snag Your Dream Internship
- Smart Ways to Live Cheaper on Campus
- YouTube the New Essay in College Applications
- High School Senior's Advice on Picking Right College
- Colleges Where Need for Aid Can Hurt Admission Odds
- 7 Steps to Find a Great Affordable College
- Do Colleges Prefer Rich Applicants
- How to Pick the 'Right' College
- Latin America Leads in School Laptops
- NCAA Men's Basketball Graduation Rate Disparity Between Races Grows
- NCAA March Madness & Diploma Sadness
- Organize Your Study Space
- Cleaner Greener College Living
- You're In! And Here's a Free T-Shirt
- Why College Students Cheat
- Fraternities & Sororities: Going, Going ... Greek?
- Alternative Spring Breaks Combine Service & Learning
- How to Relax and Ace Your College Exams
- Making Majors out of Math Skills
- Free Online Course Offerings Grow in Abundance and Popularity
- Will You Get Enough Financial Aid?
Education: Big Changes Coming to Student Loans | Kim Clark
(c) 2010 U.S. News & World Report