dcsimg
You are here:

Major Student Loan Overhaul in Washington

On September 17th the House of Representatives passed the Student Aid and Fiscal Responsibility Act, a bill that provides billions of dollars in federal spending on education and that makes a major change in the structure for student loans in this country. The omnibus bill is described in the New York Times as a step towards the loan relief that has become a major issue as the cost of higher education has soared.

The principal revision in the loan program is eliminating the current loan option of federally guaranteed loans provided by private institutions. Instead, all federally backed student loans will come directly from the government.

Direct loans from the government currently available are based on need. Any student is eligible for a loan that is guaranteed by the government but issued by a private lender, and these are the large majority of all student loans. The loans originated by banks and other lending institutions are called Federal Family Education Loan Program (FFELP) loans - which currently represent about 75% of all student lending. Students who max out on federally guaranteed or subsidized loans also have the option of taking out private loans from banks to meet further needs.

The new legislation raises the limit on direct student loans and will also increase the ceiling for Pell grants, a program that provides direct grants for higher education to low income students. There are also funds to underwrite community college development and some special education programs.

There are current ceilings on student borrowing, both for total student loans and for annual loans. They vary through the undergraduate years and go up for graduate students. Thus a freshman who wants to pursue a business administration degree is may currently borrow a maximum of $5,500 for that year.

The rate rises annually, and by his senior year he can borrow $7,500 for the year. The ceiling rises again for graduate students. If the borrower decides to pursue a management degree through an MBA program, the ceiling can rise to as much as $12,500 for combined subsidized and unsubsidized loans. Those figures will change under the new student loan structure, but they be finalized in the continuing debate on Capitol Hill

But the big change in this legislation is eliminating private lenders from the federal student loan mix. The current loan procedures require college participation and under the new law, schools will be required to switch to the new lending system by July of 2010. That's an enormous bureaucratic shift for the federal government as well, to be accomplished in less that one year.

This bill is expected to pass the Senate, although there is going to be a loud debate about government intervention, big spending, etc. The Obama administration sees the new legislation as a money-saving device. Without the obligation to buy student loans from private institutions, the White House says there will be an $80 billion savings over ten years, which can underwrite the increased Pell grants to low income students.

Search Schools

      
Matching School Ads
  • Capella University

    An accredited online university, Capella University offers bachelor’s, master’s/MBA, doctoral, and certificate programs designed to take you to the forefront of your profession.

    Programs

    • DHS - Advanced Program Evaluation & Data Analytics
    • MS - Addiction Studies
    • MS - School Counseling (CACREP-accredited)
    • More...

    Location: Online

    Capella University Request Info »
  • Keiser University

    Since 1977, Keiser University has provided quality student-centered, career-focused education. Keiser University Online offers degree programs online to prepare students for in-demand professions.

    Programs

    • Master of Science in Psychology
    • Bachelor of Arts in Psychology
    • Business Administration, BA - Human Resource Management
    • More...

    Location: Online

    Keiser University Request Info »
  • Liberty University

    100% Online & No Standardized Testing

    Programs

    • Doctor of Education: Community Care & Counseling: Marriage & Family
    • Doctor of Ministry: Evangelism & Church Planting
    • M.Div: Homiletics
    • More...
    Location:
    Lynchburg: 1971 University Blvd,, Lynchburg VA 24515
    Liberty University Request Info »
  • Georgetown University

    Georgetown University is a private, not-for-profit, accredited university located in Washington, DC. Founded in 1789 by John Carroll, Georgetown is America’s oldest Catholic and Jesuit University.

    Programs

    • Master of Professional Studies in Sports Industry Management
    • Master of Professional Studies in Real Estate
    • Masters of Professional Studies in Technology Management
    • More...

    Location: Online

    Georgetown University Request Info »
  • Ultimate Medical Academy Online

    Get personalized attention with UMA.

    One-on-one tutoring, pre-interview coaching, job search assistance, alumni services-they’re all included in Ultimate Medical Academy’s competitively priced tuition. As a nationally accredited school, we provide quality career training online and at our campus in Clearwater, Florida.

    Programs

    • A.S. - Healthcare Information Technology
    • Diploma - Medical Administrative Assistant
    • A.S.- Health Sciences (Pharmacy Technician)
    • More...

    Location: Online

    Ultimate Medical Academy Online Request Info »
  • Platt College

    Turn your talents into a career at nationally recognized and accredited Platt College.

    Programs

    • Veterinary Technology Alternate Route - Certificate
    • Respiratory Therapy
    • Veterinary Technology - Associates

    Location: Online

    Platt College Request Info »
  • Widener University

    Why Choose Widener University?

    At Widener University, we proudly cultivate challenging and culturally diverse learning environments where academics, leadership, and service come first. Our curricula are connected to societal issues and challenge students to take social responsibility for their role in today's global society.

    Programs

    • Masters of Social Work
    • Master of Business Administration
    • Master of Business Administration - Business Process Innovation
    • More...

    Location: Online

    Widener University Request Info »
  • George Washington University

    GW's Graduate School of Education and Human Development offers online Graduate Education Master’s programs that prepare leaders like you for research, policy, and practice in the fields of teaching, leadership and administration and education technology.

    Programs

    • Graduate Certificate in Instructional Design
    • Master of Arts in Education and Human Development in Educational Leadership and Administration
    • Graduate Certificate in E-Learning
    • More...

    Location: Online

    George Washington University Request Info »
  • Regis College

    Regis is a leading Catholic university in greater Boston with undergraduate, graduate and doctoral students in the arts, sciences and health professions devoted to engage, serve and advance in a global community.

    Programs

    • Online Master of Health Administration

    Location: Online

    Regis College Request Info »
  • University of Saint Mary

    Grow Your Career with the University of Saint Mary

    Programs

    • Master of Business Administration
    • MBA Marketing and Advertising Concentration
    • MSN: Nursing Education Specialization
    • More...
    Location:
    Leavenworth: 4100 S 4th St, Leavenworth KS 66048
    University of Saint Mary Request Info »
  • Matching School Ads

    Quick School Search

    College & Career Search Tools

    • Careers: Unsure about your career path? Study profiles of hundreds of professions.

    • Interviews: Professors and deans sit down with our team to give you unique insights on college life.

    • Military Education: Find only Military friendly online schools and campuses.

    • Student Reviews: Know before you go. Read student reviews on over 2000 accredited colleges. Write your own experience.