Obama Student Loan Reform Bill Government Loans: New Education Reform and Federal Student Loan Consolidation
In the healthcare bill which was passed by Congress in late March of 2010, there were many additional stipulations which were written into the bill to help pay for the massive health care reform. One of those stipulations was that the government was going to take over the student loan business for hopeful college grads, post-grads and beyond.
But while much has been made of the Obama Student Loan Reform Bill, it left many people wondering just what the heck was in it because it was overshadowed by the healthcare bill. Here are some of the proud points as reported by CNN that are encompassed in the Obama Student Loan Reform Bill.
When Does the Student Reform Bill Begin?
The switch over will begin on July 1, 2010. Durning the following 10 years, the United states government seeks to make $500 billion in loans to students according to the CBO. (Congressional Budget Office)
How Does the Obama Student Loan Reform Bill Affect the Pell Grant Program?
Because of a deficit shortfall, the Pell Grant program awards were slated to drop after the 2009-10 school year to a lower amount of $2,150. Currently the maximum award is $5,350. Because of the new legislation, the maximum award under the Pell Grant Program will actually increase to $5,975 during the next school year.
What Percentage Rate will be Charged for the Obama Student Loan Reform Bill
The United States government is borrowing the money at an interest rate of 2.8 percent. The money will then be lent to students at a rate of 6.8 percent. The 4 percent profit that the government makes will be applied toward further funding of students loans as well as funding portions of the Health Care and Education Reconciliation Act of 2010.
Helping Students Currently Paying Loans
Currently students who are still paying down loans after 25 years have the remainder of their federal student loan debt forgiven. According to the University of Houston Newspaper, this term will be lowered to 20 years.
Additionally, for instant payday loans online that are taken out after 2014 the bill calls for the maximum amount that a graduate is required to pay from their salary to be capped at 10 percent. As of now that amount is 15 percent.
How Much Does this Save the Taxpayers?
According to the CBO, the reform of student loans essentially cuts out the middle man when providing the money. This is said to save taxpayers $61 billion over the next decade.