By Ashley Russell on September 12, 2011
.jpg.aspx?width=75&height=75) In March 2010, the United States Congress passed and President Obama singed a landmark bill into law, the now infamous healthcare reform bill. Often lost in this bill were several changes to the federal student loan process. Here is a description of some of the major changes that effect student financial aid everywhere.
One slightly positive change in the bill is that students’ Pell Grant awards were addressed. For the 2010-2011 school year the maximum Pell grant award was $5,550. This continues through the next two school years (2011-2012, 2012-2013). After these school years it is scheduled to rise for 5 years in congruence with the CPI-U. The CPI is Consumer Price Index which measures the rise in price in goods for the United States, in other words, inflation. The CPI-U is the Consumer Price Index for Urban Consumers which is the same thing, just specialized for urban individuals. Although this isn't a drastic increase, it does address inflation, which is better than nothing, especially in these tough economic times. It most likely will not keep pace with the inflation of tuition, but it is better than the Pell Grant remaining at the same level.
One other significant change is how federal loans will work in the future. Instead of having to go through private companies, students will now go through their college financial aid offices for these loans. This puts much more of the administrative burden on the colleges themselves rather than the federal government. The loans that students will get through their school’s financial offices often have slightly higher interest rates and higher denial rates than the PLUS loans students previously used.
Finally, the bill changes the repayment system for student loans. The changes cut the level of income that repayments are based on from 15% to 10%. It also lowered the amount of years from 25 to 20 years for forgiveness on the debt. These changes, however, only affect new loans given out so they would not influence students who already have loans through the federal government.
Overall, the bill was a positive step for student financial aid. It made several small positive changes but could have been much more influential. However, for the present economic times, any improvement in student financial life should be seen as a major win. Hopefully this sort of improvement will continue in the years to come. |