Loans Expert

Shortly after President Obama pushed his health care reform through Congress, Idaho became the first state in a growing coalition rallying against the bill as an unconstitutional act of the Federal Legislature. At the same time, the state’s budget cuts to higher education are forcing college students to pay higher and higher tuition rates. How are these distinctly divergent concepts linked?

The answer is simple. The bill not only changed the face of health care in America — it also revamped the student loan system. “What’s gotten overlooked amid all the hoopla, all the drama of last week, is what’s happened with education,” Obama said in a speech at Northern Virginia Community College, reported by the New York Times.

The intent of the federal loan revisions is simple: cut out the middle man. Currently the federal government pays banks to provide student loans to college and university students. This new legislation calls for the federal government to provide the loans directly. Over the next 11 years, the estimated savings will be nearly $68 billion. These savings will be passed onto students in the form of Pell grants. Instead of paying the “middle man” to facilitate these loans, the money will be pumped directly into the higher education system.

The repayment system will also be drastically restructured. Currently the cap to loan repayments is 15 percent of an individual’s income above a basic living allowances, the new bill caps repayments at 10 percent. Additionally, if they keep up payments, student’s balances will be forgiven after 20 years instead of 25 years, or after 10 years, assuming they work in a public service such as teaching, nursing, or serving in the military.

BSU students are facing tuition hikes of roughly 9 percent. So why is our state government averse to the health care reform bill, which will drastically help students procure necessary loans? With the new system, the federal government can increase Pell grants from $5,550 to $5,975 by 2017, an increase of 7.2 percent. Additionally, it will provide 820,000 more grants by 2010. These Pell grants, which don’t require repayment, are used to help the less fortunate get a college education. With tuition on the rise, fewer and fewer students will be able to obtain a higher education without this assistance.

I find myself forced to question the decisions made by our state government. Our elected officials are cutting funding to higher education. They are requiring students to pay the difference. And they rebel against a bill which makes it easier for students to receive college loans, as well as pay those loans back. This seems to be a cruel and unusual punishment for the disenfranchised college student. Apparently, the state government wants us to pay more for our education and suffer longer in an attempt to pay off the loans. This position isn’t morally defensible, and shouldn’t be condoned.

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• Obama promotes ‘overlooked’ changes to student loan program
• Democrats to Student Loan Reform: Drop Dead
• Student loans bill clears House
• Obama proposes changes for student loans
• Governor favors low-cost college loans

Tags: Loans, student loan reform, Student Loans