Wednesday, March 31, 2010

Student Loan Hoopla

I'm so happy to see that President Obama enjoys using the world Hoopla. It's one of my favorites. I'm even more happy he used the word in context of a discussion about student loans. Many recent graduates find themselves crushed by the burden of their student loans--loans that allowed them to seek advanced education and training yet now prohibit them from enjoying life. Several years back, in fact, I read an analysis by an economist that suggested that if graduates weren't being crushed by their student loans the impact of their discretionary income would significantly drive the US economy through their purchase of homes, washing machines, cars, etc. 

Yesterday Obama said that lost in the hoopla of health insurance reform, significant changes to the student loan industry are not being noticed. 

Notable talking points of the Health Care and Education Reconciliation Act:
  • Double funding for Pell Grants since President Obama took office, to ensure that all eligible students receive an award, and that grants keep pace with the rising cost of college
  • Invest in community colleges to help an additional 5 million Americans earn degrees and certificates over the next decade
  • Increase support for historically black colleges and universities and minority serving-institutions, which have been particularly hard hit by some of the challenges facing all universities, and account for nearly sixty percent of the 4.7 million minority undergraduates in our country.
  • Ease loan repayment by capping student loan payments at 10 percent of a graduate's discretionary income, with any remaining balance forgiven after 20 years. And those who go into public service after graduation can have their loans forgiven after 10 years.
  • End government subsidies given to financial institutions that make student loans, switching to direct loans. This saves nearly $68 billion for college affordability.

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