Feds Take Over Federal student loans

As part of reconciliation health care, the most important changes have been enacted into law on federal student loan programs. Included in this legislation is what seems to be no less than a federal takeover of federal student loans, along with large increases in Pell Grants.

The new law eliminates the Federal Family Education Loans Program and cut out private lenders. As of July 1, all federal loans originated through the Federal Direct Loan Program. According to the non-partisan Congressional Budget Office, cutting out banks and private lenders from the area of ​​student loans will save taxpayers $ 61 billion over the next 10 years, at least 10 billion dollars that will reduce the federal deficit and to help underwrite the cost of health reform.

The new law also includes $ 36 billion for Pell Grants, which provide subsidies to low-income and some middle-income students. The maximum amount of Pell Grants this year will grow to nearly $ 5,300 and $ 6,000 in 2017. Without the new law, Pell Grants would be limited to $ 2,150 next year. Students who receive Pell Grants will be great need to borrow less to pay for college.

Since 2014, borrowers also get better terms of repayment of debt. Borrowers can reduce the monthly payments current federal student loan at 15 percent of their discretionary income. In 2014, this limit will be reduced to 10 percent of discretionary income.

The only role left for the private sector will be servicing the loan, and the legislative intent seems to be to ensure that such contracts will be awarded based on performance and service the loan companies that provide the best customer service.

It seems ironic that this last-minute legislation on health care reform in fact, amounted to a federal takeover. Although it is hard to take seriously the argument that the new law amounts to a health care purchasing health care, the new law seems absolutely put directly in charge of federal government loans to students of our nation .......