Obama’s Student Loan Reform Bill Would Eliminate Private Lenders
The new student loan reform bill easily made its way through the House and is now on its way to the Senate where it may find some opposition. The new bill would completely change the way students obtain financial aid by eliminating private banks and lenders from the equation.
Sponsors of the bill say that by eliminating the middle man (i.e., private lenders), the federal government could save as much as $90 billion over the next decade. This money would then go to helping students who can’t afford to go to college the opportunity to do so. It would also be used to increase Pell Grant limits and provide additional funding to community colleges nationwide.
Opponents of the bill say that the savings estimates are inflated and that eliminating private lenders from the student loan process would cost thousands of people their jobs – mostly those at banks who focus solely on handling student loans. Some estimates are as high as 30,000 jobs being cut due to this new student loan legislation.
The process of consolidating student loans should not be affected by this new bill, although not all of the details have been made public yet. I would expect, however, for student loan consolidation to remain either a federal or private option for students and graduates.
The federal government is asking colleges nationwide to be ready for the change by summer of 2010. Most colleges agree that this is not enough time to get prepared for such a big change, but nevertheless will do what they can to make the necessary adjustments within their own financial aid offices to accommodate this new legislation.
Photo: Flickr – David Reece
Consolidating student loans is a way to reduce student loan payments, lower interest rates and to make student debt easier to manage. Here at Consolidating Student Loans, you'll find a wealth of information related to students loans and consolidation. Thanks for stopping by, and make sure to grab our RSS feed to stay up-to-date with the latest student loan news.
all good things