Revamping of Student Loans Approved by Senate

[azurnoir]

Source: NYT

Ending one of the fiercest lobbying fights in Washington, the Senate voted Thursday to force private commercial banks out of the federal student loan business, cutting off billions in risk-free profits in a sweeping restructuring of financial-aid programs that was included in — if overshadowed by — the health care package. The House was expected to concur later Thursday.

For 45 years, commercial banks like Sallie Mae and Nelnet have made loans under the bank-based loan program, receiving guaranteed federal subsidies to loan money to students, with the government assuming nearly all the risk.Democrats have long denounced the program as a form of corporate welfare that fattened the bottom line for banks at the expense of students and taxpayers

The legislation substitutes an expanded direct-lending program by the government for the bank-based program, directing $36 billion over 10 years to Pell grants, which are aimed at students from low-income families.

Overall, the Congressional Budget Office said, the new lending approach will save taxpayers approximately $61 billion over 10 years. Roughly $40 billion of the savings will be redirected to higher-education. In addition, education programs will get an additional $10 billion from the health-care reform package.



Read more: http://www.nytimes.com/2010/03/26/us/politics/26loans.html?partner=rss&emc=rss

[FSogol]

1. K & R. n/t

[SemiCharmedQuark]

2. YES!!!

I didn't think this would pass, but there you go.

[MindandSoul]

3. Great news! What's next???

[mike_c]

4. what about reform of existing ball-and-chain loan repayments...?

Nothing would do more to improve my financial life than to not pay so much of every paycheck to Sallie May and William Ford. Nothing.

[QC]

11. Get a federal direct consolidation loan

and set it up for income based repayment. That's the only thing that has made it possible for me to live. Payments are limited to 15% of disposable income, which is a major improvement over the normal repayment.

[mike_c]

13. mine IS mostly consolidated...

...and yes, that's the only thing that makes it doable. But it will take thirty years to repay, and I'll retire in less than ten. But some of my loans were not consolidatable, so Sallie Mae still has about $25,000 worth (and the feds have about $50,000, give-or-take).

I've been paying them off now for more than a decade. For the first five or six years my payments were over $1,100/month, now I've reduced them to about $700/month by changing repayment plans, but as I said, it will take 30 years and I won't work nearly that long. It utterly galls me that I've repaid so much and the principle has only declined by a couple of thousand dollars in nearly 15 years. Each month I send the feds and Sallie Mae a combined $700, and they credit my combined principle about $45 or so, if I recall correctly. And as I said, it used to be even worse, when the payments were even higher.

[QC]

14. I feel your pain, as a pretty famous Democrat once said.

My loans have been a real curse. I think it is a shame that in what we are always told is the greatest nation on earth people have to sell themselves into a lifetime of debt peonage to get an education.

I hope something will come about for people in your situation. Unfortunately, this bill doesn't seem to do anything for people like us.

[mike_c]

16. I'm so tired of hearing "this bill doesn't do anything for people like us...."

Shit. :nuke:

[Iowa]

18. You probably already know this, but have you looked into this?

My daughter's loan payments were reduced to about one-fourth of what they would have been, and if she continues on the plan for 10 years, any remaining amount will be forgiven. This was up and running as of a few months ago, but a lot of people still aren't aware of it. So for what it's worth...

http://www.finaid.org/loans/ibr.phtml

[glinda]

20. No help for me in Health Insurance and Student Loans changes....

[jwirr]

5. If I am not mistaken this is also retroactive but I do not know how far

back. That is going to save a lot of young families.

[fascisthunter]

6. I am stuck with big debt for taking out money through Sallie Mae and Nelnet

I owe enough to buy a house, yet I will never be able to afford to buy one now. My mistake, but the banks sure made it easy for many of us to make that mistake.... I will be paying for this for the rest of my life. Good to see something being done. Too bad it's too late for so many.

[QC]

12. See post 11--it might be helpful. n/t

[glinda]

19. It would help if they rolled back the loans to the original amount for us with older loans.

[Soylent Brice]

7. K & R

[ElsewheresDaughter]

8. I heard it is being striped from the bill...it is going back to the House.....

The landmark US healthcare reform bill must be sent back to the House of Representatives for approval after two issues were raised by Republicans.

During an all-night voting session, two points relating to student loans were found to violate Senate procedure, said an aide to the Senate majority leader.

They were described as "relatively minor provisions".

They will have to be deleted, approved by the Senate and then sent back to the House for approval.

http://news.bbc.co.uk/2/hi/americas/8586492.stm

[mopinko]

phew. just in time

in fall 2011 I expect to have 5 kids in college.

[mopinko]

9. phew. just in time

in fall 2011 I expect to have 5 kids in college.

[Owl]

10. YES!!!!!!!!!!

[amandabeech]

15. I feel so bad for younger people.

The amount of student loan debt you have is absolutely mind-boggling.

I have huge problems with health care, but I got out of two excellent educational institutions with debt that seems miniscule compared to what it would be now.

Here's a deal for you folks, young and old, in heavy student debt.

You help people like me who are too old and make just a little too much to benefit from HCR to make things affordable, and people like me will help you get some relief from your ridiculous debt loads.

How about it?

[BrklynLiberal]

17. Great news...

[defendandprotect]

21. ...because PRIVATIZING government costs more upfront ... and

certainly costs more in the wake of corruption which follows!!!

[defendandprotect]

22. Fantastic move here . . .!!! Good for the Dems/Obama -- !!!

[lonestarnot]

23. Excellent!

:woohoo: