House Passes Major Student Loan Reform
You probably already know about the major health care bill that passed the House on Sunday night.
But did you know that tacked onto the end of that bill is a $60 billion student loan reform program.
I’ve talked to you in the past about President Obama’s plans for overhauling student loans, and now those plans have come one step closer to being implemented as law. The House amendments still have to be approved by the Senate.
The House initiative would eliminate $60 billion in subsidies the federal government currently pays to private lenders like Sallie Mae to make Stafford student loans. Instead, the Department of Education would directly make these loans to students, saving that $60 billion in subsidies over 10 years.
Over half of those savings — $36 billion — would be funneled into the Pell Grant program, a need-based grant for low-income college students. When I first told you about the plans for the Pell Grant, the funding boost was supposed to cover an increase in the yearly grant, plus an extension to cover more Americans. Unfortunately, due to budgetary shortfalls, this added boost from the student loan reform initiative won’t accomplish any of those goals. It will just barely make up for what Congress didn’t have to spend on the program in the first place.
Other savings will be funded to Obama priorities such as grants for community colleges and Historically Black Colleges and Universities ($2 billion).
The House first passed a more comprehensive version of this legislation back in September (It was called the Student Aid and Fiscal Responsibility Act of 2009). That bill got mired down in debate in the Senate. In an attempt to pass at least some of that original legislation, the House attached this somewhat abbreviated version to the Health Care Reform bill on Sunday.