Remember back in February, when the Finder reported on President Obama’s student loan plan – a complete revamp proposal? He plans to save billions a year by making the federal government the student lender, rather than the current system in which the fed subsidizes private lenders like Sallie Mae. He would then use some of those savings to up the amount of the Pell Grant — and the number of students eligible for this low-income grant.
Well, the President’s reform plan got a major nudge on Tuesday, when Congress released its 2010 budget resolution. Both the House and Senate gave tacit approval to the president’s bump in Pell Grant funding, by creating reserve funds that would cover turning the Pell program into an entitlement — like social security. The resolution also gave the congressional education committees until October to figure out how to save $1 billion over five years — the goal set out by President Obama.
Despite the good news for the president’s student loan plan, lawmakers remain skeptical about completely eliminating the role of outside lenders. For example, the resolution included a strongly worded, non-binding “Sense of the Congress” resolution, which praised the role of lenders and stated that “any reform of the federal student loan programs … [must] include some future role for the currently involved private and non-profit entities.”
(Personally, I find myself wondering how much of this skepticism is motivated by the strong pull of lobbyists. What do you think?)
Check out this article from Inside Higher Ed for a full run-down on the Congressional resolution. You can also learn more about the current student loan system by reading through the Finder’s student loan section.