According to www.time.com the house holds hearings and looks likely to pass a student loans bill as early as this week. Though democrats and republicans hold very different view on Obama’s plan for the future of student loans, one thing is for certain this will be the largest change we have seen to our student loans system since 1956.

“Obama’s rhetoric was understandable. His plan is to do away with a system in which the Federal Government subsidizes banks and other private finance companies like Sallie Mae to lend money to students. The Administration essentially wants to cut such companies out of the game and run the system itself. Democrats claim the move will save $87 billion over 10 years, which can be used for a laundry list of education priorities, including increasing the maximum amount of Pell Grants, expanding Perkins Loans and investing in community colleges and other programs.

Many Republicans, not surprisingly, don’t see it that way. “This bill is a massive expansion of the Federal Government, pure and simple,” says Alexa Marrero, spokeswoman for Congressman John Kline, the ranking Republican member of the House Education and Labor Committee.

Educational institutions currently have two ways to offer federal loans to students. In the Federal Family Education Loan (FFEL, pronounced “fell”) program, the government pays subsidies to banks and lenders to dole out money to borrowers and reimburses companies up to 97% of the cost of any loan that is not paid back. The second way is the direct-loan program, created in 1993 as an alternate option, in which the government cuts out the middle man, lends money directly and gets all the profits…”

Read Full Story…
www.time.com

Tags: FAFSA / federal student loans / grad school loans / parents / student loans

Share this Student Loan Information or Comment!