Bastyr University(April 2010) – In successfully enacting his recent health care overhaul, President Barack Obama also signed several student loan reforms into law. The new student loan bill, which the President included in his final additions to the health care legislation, makes the government the primary direct lender for student loans – banks and other institutions will no longer occupy a "middleman" position between the government and loan recipients.
This reform creates three primary changes for students:
- Their monthly loan payments will decrease (under certain repayment plans). Starting in 2014, graduates with income-adjusted payment plans will only pay up to 10 percent of their income in monthly payments, as opposed to the current 15 percent.
- Their loans will be forgiven earlier. Those who have made regular payments on their loans will be eligible for loan forgiveness at 20 years, rather than 25, from the time they start making payments.
- Eligible students will have access to more money through the Pell Grant Program. The government plans to use the money it saves as a direct lender to increase accessibility to this program, which provides need-based grants to low-income undergraduate and certain postbaccalaureate students.
Want to know more? Read Bastyr University's complete article on the new student loan reforms.