President Barack Obama today signed the Health Care and Education Reconciliation Act of 2010 which includes a provision to reform the student loan program.
Intended to make education more affordable, the new law will end subsidies to special-interest private lending companies and offer loans directly to students in colleges and technical schools, essentially cutting out the middleman in the loan process. Funding for Pell Grants will be doubled and annual student loan repayments will be capped at 10 percent of the graduate’s income. The Obama Administration estimates that an additional 5 million Americans will gain financial help to earn degrees and certificates at community colleges throughout the nation over the next decade.
Wisconsin Rep. Steve Kagen (D-Wisc. 8th District) is especially excited about the new law. In a statement released by his office the Congressman said, “For too long our student loan system placed the interests of Big Banks over the needs of our children in search of affordable higher education…This law is another important victory for working families in Northeast Wisconsin as we continue to build a better future for all of us.”
The new program, which will go into effect on July 1st of this year, is expected to save the federal government nearly $68 billion dollars over the next 11 years. That money will be funnelled back into the Pell Grant program providing more and larger grants for students.
“When we get education right, everything else will follow, but if we get it wrong, nothing else will matter. Access to an affordable college or technical school education is absolutely necessary,” said Dr. Kagen. “And by ending subsidies to banks, we are helping to secure access to schools otherwise unaffordable, and eliminating wasteful spending of our hard-earned tax dollars.”