On the heels of health care

The Health Care and Education Reconciliation Act, has received varied criticism and praise from both sides of the political fence.

President Barack Obama signed The Health Care and Education Reconciliation Act at Northern Virginia Community College in Alexandria, Va., on March 30. The signing of this act not only reformed health care, but also student loans.
However, some students at NKU were unaware that student loans had been reformed along with health care, or didn’t agree with the act.

Ryan Gnessin, a computer science major, was disappointed about the health care act passing because his parents were in the bracket that would be taxed more. Gnessin also said that he hadn’t been able to follow the student loan portion pass but said he “didn’t see how this is going to decrease the budget.”

Danielle Wallace, an art major, was aware that health care had been reformed but didn’t feel the American public had all the information.

“I think it’s sneaky, and the bill they were trying to pass had thousands of pages,” Wallace said. “To get it passed, they hid parts.”

In Obama’s address to the audience March 30 in Virginia, he said the bill would positively impact students.

“You see, for almost two decades, we’ve been trying to fi x a sweetheart deal in federal law that essentially gave billions of dollars to banks to act as unnecessary middlemen in administering student loans,” Obama said. “So those are billions of dollars that could have been spent helping more of our students attend and complete college. Instead, that money was spent padding student lenders’ profits.

“Now, it probably won’t surprise you to learn that the big banks and financial institutions hired an army of lobbyists to protect the status quo. In fact, Sallie Mae, America’s biggest student lender, spent more than $3 million on lobbying last year alone.”

Obama also vowed to increase the amount of college educated Americans in his weekly address to the nation on March 27.

Obama, taking his time frame from the late John F. Kennedy, said: “By the end of this decade, we will once again have the highest proportion of college graduates in the world.”

By cutting out the middleman, as Obama termed the financial institutions, the federal government will be able to save $68 billion over the next 11 years, according to a post by Brian Levine, deputy domestic policy adviser to the Vice President, on the Middle Class Task Force White House blog.

This money is to be used for four main purposes. First, the act allows for nearly 800,000 new Pell Grants to be issued over the next 10 years. Secondly, the government will raise the award for Pell Grants. Obama said at the acts signing that Pell Grants previously covered more than three-fourths of the cost of college, but due to inflation and other economic factors, now covers only about one-third. Using a portion of the $68 billion saved will allow for the maximum award of a Pell Grant to increase to $5,500 starting in 2010.

The process of how much the award for a Pell Grant will increase is a complicated ma ter, but the National Council of Higher Education Loan Programs (NCHELP) breaks the process down to relatively understandable terms in a presentation published March 30. Beginning in 2013, the grant will increase along with the Consumer Price Index, hopefully alleviating some of the cost of inflation. But beggining in 2018, the award will remain flat, although no specific amount has yet been proposed.

Third, and quiet possibly most important to students, is how students will repay their student loans and what kinds of loans will be available. Ending June 30, 2010, issuance of new Federal Family Education Loans (FFEL) will end and beginning the next day, all new Stafford, PLUS and consolidation loans will be made under the Direct Loan program, according to a presentation by the NCHELP. Also according to the presentation, students who currently have FFEL will be able to continue receiving program benefits.

The act does provide for students who have multiple types of education loans and who have also not yet begun to pay them to consolidate between July 1, 2010 and June 30, 2011. Before consolidating, students should contact a trusted financial adviser to ensure that they are eligible for the program and that it will benefit them.

At the signing of the bill, Obama said he plans to revamp the Income Based Repayment (IBR) program that launched last summer. Students who currently under the IBR program pay no more than 15 percent of their previous years’ income towards repayment of student loans. Under the new IBR program, that amount will be capped at 10 percent. Additionally, if a student makes payments on time, any remaining debt will be forgiven after 20 years, in certain circumstances.

The downside: the new IBR program will not be implemented until 2014. For information about the current IBR program, including a payment chart, visit: http://studentaid.ed.gov.

Finally, the act allows for historically black colleges and universities and minority serving institutions (HBCUs and MSIs) to receive additional money. According the NCHELP, HBCUs and MSIs will receive $255 million each year between 2010-2019, but the act does not include any authority for these grants after 2019.

Obama also took the signing of the act to make sure colleges understand they have a responsibility to keep tuition costs down.

“We continue to expect colleges and universities to do their part to hold d own tuition increases. That has to happen. We’ve got to work on that.”

Story by Vern Hockney