Most students attending college for the first time share the common worries of paying off loans. Such is the case with Jackson Whalan, a 18 year old freshman attending the New School in New York City. With the universities cost floating around the $50,000 range, loans are a necessary evil. Jackson remarked that "schools expensive for my family, we give up a lot to keep me here and loans are what gets us by." This dependency on loans to attend school requires students to leave after school with debt to pay off and a job to look for. The recently passed student loan bill is an effort to alleviate some of the load students face regarding debt.
The bill itself consists primarily of amendments to the preexisting Higher education act which sought to increase and improve the resources the United States government shelled out for students wishing to move past secondary schooling. The act also helped enhance already existing libraries and resources in colleges and universities. This move towards increasing the governments involvement was carried out in 1965 and since then has gone through many reauthorizations to continue educational growth in the U.S.
What's important to note is the push towards federal funding's involvement in schools. After the devastation of losing the race to put the first satellite into orbit. The United States recognized an increasing need for higher education, primarily in the scientific sphere. It had a profound effect on the necessity for the government to be more proactive in school funding as a means of generating progress for the nation. This rather dormant idea has again been pushed to the political foreground with the new amendments and the passing of the Student Aid and Fiscal Responsibility Act.
Decades ago however the process of more affordable and reliable student funding was started with the GSL program (Guaranteed Student Loans). This sought to make it possible for students take out loans without any credit check to hold them back. It cut the rates that banks could charge for interest on loans and required that all banks offer the same rates for students loans.
With all banks using the same interest rates, "When students picked the lender from which they wanted to borrow they would decide based on their or their parent’s prior banking history, the location of the bank branch or which bank offered them a free Frisbee." Said Bill Mack of Financial Aid Experts, Inc. What this enabled the government to do was "provide students with a loan program without needing to raise the capital needed to fund the loans," as well as allowing more freedom for students in choosing a bank to invest with.
What we see enacted in the new bill is to further increase the funding the government will put towards federal grant programs as well as lowering the cap on monthly federal loan payments from 15% down to 10. In other words the bill will help to provide more federal loans as opposed to private loans offered previously only by banks. It will also attempt to lower how much those people with loans have to pay back each month, cutting down on the total cost of going to school. These amendments shift the bulk of the costs required to attend post secondary schools more in the hands of federal funding. This will make loans more affordable but also support an even better guarantee regarding loans than the GSL program.
On a final note by putting the cap for student loans down 5% the educational committee hopes to push students to pay off their loans. If students keep up with the payments, after 20 years their debt is forgiven. If enlisted in the military or a public service field the debt is forgiven in just 10. These changes will not only help to lower costs for the students and guardians taking out the loans but also for the tax payer as well. According to Nancy Pelosi speaker in the U.S House of Representatives, "this act will save taxpayers $61 billion over the next 10 years and will reduce the deficit by a minimum of $10 billion over the same period of time."
The student loan program is a small step for the United States towards a progressive educational funding system, but a large step forward for students looking towards college. More support may be necessary but this bill may prove to be effective in making college a possibility for more students.