Not sure where to post this, but this didn't get much press that I saw -

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Congress overhauls student loan system
Changes mean good news on repayment, grants
By JEANNIE KEVER
HOUSTON CHRONICLE
March 25, 2010, 11:30PM
After a little last-minute drama, Congress approved the biggest change to the student loan program in a generation Thursday, booting private lenders and instead funneling all loans directly from the federal government.

Financial aid officers say students will barely notice the changes and will benefit from some of them, including a provision to link repayment to the borrower's income.

Still, Shana Worley, a business management student at the University of Houston-Downtown, is worried.

“All they told us was that it is changing from getting loans from a credit union or a bank to direct government funding,” said Worley, who received an e-mail from the school earlier this week explaining the change. “I don't know if government funding is going to help us get it faster, if we'll get more, or how they'll determine who really is in financial need.”

UH-Downtown, like colleges around the country, is scrambling to be ready for the change, set to begin July 1.

For schools, the switch involves tweaking computer software and rewriting materials for students who apply for a loan.

“It's not terribly difficult,” said Lynda McKendree, dean of scholarships and financial aid at the University of St. Thomas, which began preparing for the switch last fall after the Obama administration first proposed it.

She predicted it will go smoothly for students, too.

“Students won't notice any difference,” she said. “They won't see any disruption to their student loans.”

The changes, approved as an amendment to the health-care reform bill, expand government's role.

Currently, schools can choose between a private lending program or a direct lending program, in which students borrow directly from the Department of Education; now schools must participate in the direct lending program.
Savings of $61 billion

Moving exclusively to direct lending isexpected to save $61 billion over 10 years, according to the Congressional Budget Office, mainly by eliminating subsidies to banks and other lenders. Most of the savings will be used to expand the Pell Grant program, the main financial aid program for low-income students.

The maximum annual Pell Grant will go up — it's now $5,350 — and more eligible students will be covered, although Thursday's machinations left it unclear exactly how the increased amount will be determined.

The Senate passed the final piece of the health-care package earlier in the day and sent it back to the House after Republicans insisted upon two procedural changes involving the student loan program, which they said didn't meet strict rules for using the budget reconciliation process. The House gave final approval later in the day.

More Pell Grant money is good news for Worley, who pays her tuition with a Pell Grant and has two part-time jobs. She relies on student loans to pay for textbooks and other school expenses.
Plan has critics

Bankers, Republicans and some Democrats oppose the change, saying it amounts to a government takeover of the loan program and will force bank layoffs. Supporters note that the government already had assumed all risk, since it guaranteed loans made by private lenders, as well as providing subsidies.

Students still will be able to get private loans, said Sal Loria, executive director of scholarships and financial aid at the University of Houston. They won't be subsidized and guaranteed by the government, however.

Of the estimated savings, $36 billion will go to Pell Grants. An additional $10 billion will go to deficit reduction, and $9 billion will be used to help pay for health-care reform. Community colleges and historically black colleges and universities also will get a share.

Students who now have loans from a private lender will have to sign a new promissory note to the Department of Education, although they will be able to consolidate them later for a single repayment. There will be other advantages, too, said Donetta Goodall, a vice chancellor at Lone Star College, which will implement the change this summer.

“It's a shorter process for students, with less paperwork,” she said. Repayment will be based on income after the student leaves school, allowing people with lower-paying jobs to make smaller payments, she said.

Loans also will be forgiven after 10 years for people who take certain jobs, which Goodall said include law enforcement and nursing.

http://www.chron.com/disp/story.mpl/nati....

Again, the last line is what's important. Big loans, unpayable debts, come work for the government and they'll take care of those debts for you.

Debt slaves.

agreed. higher education has simply become a ball and chain on your annual wage salary.

smaller payments will kill people since the interest rate is still the same.

debt slavery indeed.

i can't tell you how angry this makes me....anything gov't subsidizes goes UP in price and down in value.....

i have a friend who paid well over $100k in loans (closer to $150k i believe) for his daughter to attend a state college (out of state for them) and she graduated in 2008, and has NOT BEEN ABLE to find a 'real job' (according to her major)

she's working in a f'ing health club....

i can't tell you how badly i feel for young people facing this economy that is producing no jobs and yet they are expected to have a degree just to get their foot in the door for anything above the most menial of work


debt slaves in deed

It’s cruel and hypocritically on my part since I have my degrees, but the boat is full and has already pulled away from the port. For people in the next generation and graduating high school right now, they’re going to have to forge a new path if they want success.

Perhaps immediately jumping from high school to college is no longer the best option. Perhaps it’s a call to not **** around in school and get the highest GPA and SAT scores to get a scholarship if you really want to go to college. Maybe you learn a trade first and save 20-30k before getting that degree.

Today’s rat racers are lazy and prefer to pay before doing something themselves. Learning a trade is definitely profitable.

Dont worry. If are part of the government and serve a system of money extractions from everyone that is not on the inside, your debts will be forgiven after, what was the obama plan, 10 years.

The last Bubble is upon is. It's bursting is gonna be epic. I cannot wait.

Quote:

Loans also will be forgiven after 10 years for people who take certain jobs, which Goodall said include law enforcement and nursing.

Just revisiting this link. So that's why so many people went into Law Enforcement and Nursing....

Uh huh........