Student loan reform saves failing system

Kernel Editorial Board

Regardless of your political stance or opinion on the Health Care Reform Bill signed into law by President Barack Obama, part of the bill will have a large impact on many students.

This overshadowed part of the bill, the education portion, is restructuring the way the government will be handling student loans, according to a March 28 Kernel article.

Notice the key word there: government.

No longer will private financial institutions receive the $61 billion subsidy through the Federal Family Education Loan Program to hand out private loans. Instead, the Student Aid and Fiscal Responsibilities Act will provide lower-interest loans to students directly from the government through the universities’ financial aid offices.

Taking out private loans to pay for your education and expenses may seem nice and convenient now. But, by the time graduation rolls around and you’re forced to pay them back, the interest will accrue and you’ll be swimming in a sea of debt.

The Obama administration is trying to lessen this burden on college students and should be applauded for their effort.

Government loans for students have a considerably lower, fixed interest rate, whereas private loan companies can have sky-high, constantly changing rates.

Because of the government’s elimination of FFEL, the Pell Grant will increase from $5,350 to $5,500 for the next two years, according to the Kernel article. After that, it will be adjusted based on inflation and the cost of living, which only makes sense. As prices continue to climb, the cost of college is no exception, so any way an education can be made more affordable can’t be a bad thing.

In addition to increased Pell Grants, the bill will cap loan repayments at 10 percent of the borrower’s income after June 30, 2014, as opposed to the current 15 percent. The bill will also allow the government to forgive a borrower’s debt after 20 years, down from 25, if payments are kept up, according to the Kernel article.

“This is (the) right thing financially,” U.S. Secretary of Education Arne Duncan said in a news release. “This is the right thing economically. This is the right thing educationally.”

The 4,094 UK students who received $15.7 million from Pell Grants for the 2009-10 school year, UK and can only expect more next year, certainly can’t argue with that.