College students who rely on several methods to finance their education can now breath a little easier. President Barack Obama paved the way for more students to receive the federally funded Pell Grant and removed the middleman in the student loan process
College students who rely on several methods to finance their education can now breath a little easier. President Barack Obama paved the way for more students to receive the federally funded Pell Grant and removed the middleman in the student loan process. At Northern Virginia Community College on Tuesday, Obama signed the last portion of the historic health care reform law that includes boosting Pell Grants and the government handling student loans instead of going through commercial banks. The measure is expected to save the government an estimated $61 billion over a 10-year period, with $36 million would be used to increase Pell Grants. Beginning July 1, all new federal student loans will be direct loans, delivered and collected by private companies under contracts with the U.S. Department of Education. “For a long time, our student loan system has worked for banks and financial institutions. Today, we’re finally making our student loan system work for students and all of our families,” the president said at the signing of the Health Care and Education Reconciliation bill. For student loan borrowers, monthly loan repayments will be capped at 10 percent for graduates with certain family sizes and income. The cap is currently at 15 percent. After 20 years of repayment, any remaining balance would be forgiven, shaving off five years from the current plan. The debt will be forgiven after 10 years of repayment for public service workers such as military, nurses and teachers, according to the bill. “We’re cutting out the middlemen and using the federal dollars we save to make college more affordable for 8.5 million more students,” said U.S. Sen. Richard Durbin, D-Ill., as he stood with students from Roosevelt University on the eve of Obama signing the bill. About 265,000 students in Illinois receive Pell Grants. Illinois will receive an additional $313.5 million for raising the maximum annual Pell Grant scholarship to $5,500 this year. The additional funds would allow an additional 23,720 students get the grant, according to Durbin, who praised the legislation. Three decades ago, a Pell Grant could cover 77 percent of public college costs. It currently covers about 30 percent, the senator said. Alexander Sewell, a junior at Roosevelt University, heavily relies on the Pell Grant to pay his tuition. “The Pell Grant counts for one-third of my college tuition. Without it I would be in dire need of $7,000 in funding. If I was not able to count on the Pell Grant, I would then have to seek additional funding through higher student loans, which upon graduation would become a crushing burden that may threaten my financial stability as I purse my career,” said Sewell, a political science major at Roosevelt.