Student Loans to Change?
It’s possible. With the Senate vote on April 29th, bank-based guaranteed loans could go the way of the dodo. According to the Chronicle:
The plan, which Congressional appropriators will use as a guide when they draw up spending bills for the coming fiscal year, instructs the committees that oversee education to shave $1-billion from programs under their jurisdiction through a process known as budget reconciliation. Lawmakers are likely to seek those savings through major changes in the bank-based guaranteed-loan system, perhaps even eliminating it altogether, as President Obama has proposed.
The result of this is that all student loans would originate directly from the Federal Government. Banks would have to compete over the right to collect the loans when it comes time to pay them back. I believe this gives the goverment more power to decide the terms of the loan, the interest rate, and so on.
Student groups hope the savings from this new program will be placed in Pell Grants and other grant programs, which students don’t have to pay back. This is a good first step for the Obama education plan. One of his campaign positions was that it should be more affordable to attend college. This is how he intends to go about acheiving that. Additionally, I believe his next step, as laid out in his platform, is to reward those students that participate in community service activities with compensation that helps pay for their education.
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