The passage of health care reform has dominated the headlines coming from our nation's capital. One important aspect of the new law has little to do with health care and everything to do with postsecondary education.
Embedded in the 1,027 page law is language that alters the way that federal student loans are distributed. Currently, federal loans are distributed to students via private lenders. By seeking profit, the private lenders make the loans more expensive for the government.
The new law eliminates the middleman and sends federal loans directly to students.
President Obama forcefully made the case for student loan reform in his weekkly address on March 27.
Year after year, we’ve seen billions of taxpayer dollars handed out as subsidies to the bankers and middlemen who handle federal student loans, when that money should have gone to advancing the dreams of our students and working families. And yet attempts to fix this problem and reform this program were thwarted by special interests that fought tooth and nail to preserve their exclusive giveaway.
According to the White House, the $68 billion in savings from reform will be used to expand and strengthen the Pell Grant program,revitalize community colleges and increase support for minority serving institutions.
For more information, read the White House press release.