All eyes were focused on the passage of the health care bill last week, but within the reconciliation bill that passed were some key education provisions – including restructuring the federal student loan program and greater investment in Pell grants.
The approved legislation effectively removes private banks from the federal student loan equation. Direct-lending by the federal government will take the place of lending by private banks. This move is expected to save $61 billion over 10 years, with much of that money to be invested in higher education. This legislation increases the maximum size of Pell grant awards, with increases tied to inflation, and eases the debt burden of students participating in the Income-Based Repayment Program. Those students in the Income-Based Repayment Program will pay 10% (down from 15%) of their income towards their loans and debts will be forgiven after 20 years (down from 25 years).
For more information on these changes: http://www.americanprogress.org/issues/2010/03/safra_minorities.html
