Getting government loans for college changed radically on July 1. Rather than banks, now the Department of Education handles federally guaranteed student loans. Bank lobbyists were kicking and screaming when the change was added to the health care reform bill earlier this year. The government ended billions of dollars in taxpayer subsidies by removing banks as the middleman for federally guaranteed loans.
Federal student loan overhaul saves taxpayers billions
The government estimates that it will save $ 68 billion in yen years by ending student loan subsidies for big banks. Colleges and universities are required to offer all loans through the Federal Direct Loan Program (FDLP) from July 1 forward. Students and taxpayers can be served better by the FDLP, the government said.
A better deal for students
The Department of Education’s Direct Loan program now handles all government loans for college. Until it was eliminated by the FDLP, the Federal Family Education Loan Program (FFELP), had allowed banks and other commercial lenders to rake in huge profits off federally guaranteed loans. Both subsidized and unsubsidized Stafford Loans for undergraduate and graduate students, also as PLUS (Parent Loan for Undergraduate Students) for parents and PLUS loans for graduate and professional degree students are affected by the change.
Students get scholarships, banks lose easy money
Money saved by ending commercial bank subsidies for government college loans goes to the Federal Pell Grant program. Students from lower-income families are eligible for Pell Grants, which aren’t repaid. Native Times reports that beginning this fall the maximum Pell Grant amount increases by $ 200 to $ 5,550, where it will remain until 2013-2014.
Students must adapt to changes right away
This year students with a federally guaranteed student loan must file electronic forms through the federal government’s secure site for the new program at studentloans.gov. Kenosha news reports that colleges and universities are under pressure to meet their responsibility to process the volume of student applicants. Financial aid officials are suggesting that students and their parents discover out every little thing they have to know from their school’s financial aid office as soon as possible.
Discover more details:
usatoday.com
nativetimes.com
kenoshanews.com
