Student loans get a boost in health care law
Students and their families should find the student loan process simpler, and lower-income students should find more financial ...
McClatchy Newspapers
WASHINGTON — Students and their families should find the student-loan process simpler and lower-income students should find more financial help under changes tucked into the health-care legislation that Congress passed last week.
The measure, aimed at taking banks and other private lenders out of the lucrative federal subsidized student-loan market, also would lessen the burden for some graduates as they pay back their loans.
Currently, certain students with low incomes and large loan balances don't have to pay more than 15 percent of their incomes each month on the loans. The new law will lower that to 10 percent.
The changes, which are projected to save the government $61 billion over 10 years, also will forgive the loans after 20 years of repayment, down from 25 currently.
Until now, there have been two federal-loan programs. Under one, the government makes loans directly to students; that program will be expanded. The other is the Federal Family Education Loan Program. Under it, banks and lenders make loans that the federal government guarantees or insures. It will end July 1.
The new law still will permit private lending institutions to make private loans, but the federal government won't subsidize them.
"This is a big deal. We've known for decades that subsidies are unnecessary and expensive, and special-interest lobbying has kept these provisions on the books," said Pedro de la Torre, advocacy senior associate
