This past March 30th “The Student Aid and Responsibility Act” was signed into law as part of “The Health Care and Education Reconciliation Act” by President Obama. The legislation provides larger Pell Grants and helps students manage their loan debts, giving more Americans the opportunity to receive a higher education.
“The Student Aid and Responsibility Act” ensures that over the next 10 years, 36 billion dollars will be added towards Pell Grant scholarships. Starting this July, the scholarship will increase to $5550 and by 2017 it will increase to $5975. Furthermore, 2 billion dollars will be allocated to a grant program for community colleges and 2.55 billion will be given to Historically Black Colleges and Universities, as well as Minority-Serving Institutions.
Students who take out loans after July 1, 2012 and keep up with their loan repayment, will have their remaining balance forgiven after 20 years and a 10 year forgiveness will be granted to borrowers in the public service field. According to Bill Mack of Financial Aid Experts, Inc. the forgiveness portion of the bill will only have a small effect on student borrowers, “The previous rule forgave the unpaid balance after 25 years. It is expected this will impact very few students. The usual repayment term is 10 years, and most students elect for that option,” Mack says.
The act was approved at Congress with 56 approving votes and 43 disapproving votes. The bill received no Republican support. “We opposed it because out of the large schools in Georgia, all said they would rather their students have choices from where to borrow money,” says Glee Smith, legislative council for republican senator Johnny Isakson. Antonia Ferrier, spokeswoman for republican senator Orrin Hatch, the senator’s main motive for disapproval was the government’s takeover of the student loan bill to pay for their healthcare. “The reason the senator opposed the student loan bill is because it was included in a massive 25 trillion dollar government health care takeover. So we can start there,” Ferrier says.
On the other hand, the Democratic Party, showed full support for the bill. “[The senator believes in] providing guaranteed loans for students, rather than leaving it up to chance,” says Rebecca Jonnas, secretary and pr for democratic senator Jeanne Shaheen. A former teacher, Shaheen has been very involved in helping higher education organizations. Contrary to the majority of democrats, Senator Blanch Lincoln from Arkansas, opposed to the bill. “She dislike the proponents and prospects of the bill,” says her pr Maria Gueria.
The legislation mandates that starting this July all new federal student loans will be direct loans, managed by private companies under contracts with the Department of Education. According to Congress, the government will save 68 billion dollars in subsidies to financial institutions that guarantee federal student loans. "The government will now be the direct lender, banks are not going to manage the loan anymore...Sometimes federal loans will not cover the students needs, but will still have our private student loans," says Karen worker at Chase Bank. The consequences of the new act on student lending companies are yet to be seen. Yet companies such as Sallie Mae have already expressed concern about the law costing them a vast amount of jobs.
Higher education government funding can be traced back to the Cold War, upon the launching of the Sputnik, the first Earth-orbiting satellite, by the Soviet Union. President Eisenhower perceived the Soviet advance as a deficit in American education, something that needed to be changed. Politicians and educators started working together in creating a new national education policy and more funding. In September of 1958, President Eisenhower passed “The National Defense Education Act,” which granted funding to both public and private educational institutions.
In 1965, “The Higher Education Act” was signed into law. The legislation introduced grants, loans, and other programs giving more students the opportunity to receive a higher education.
President Obama perceives the “The Health Care and Education Reconciliation Act” as a significant advance in expanding higher educational opportunities for American families. “We will provide the support necessary for you to complete college and meet a new goal: by 2020 America will once again have the highest proportion of college graduates in the world,” the President says.
Many students are not aware of the new legislation and do not see themselves as being directly affected. “I’m not aware of the extent of its effect,” says New School sophomore Amanda Clarke. Many of the students, however, viewed it as an important step in national education and a benefit for future student loan borrowers.
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