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Last March, President Barack Obama made an appearance at Northern Virginia Community College. According to some of the media, the Chief Executive was there to publicly celebrate the passing of a major part of his health bill. Yet this portion didn’t revolve around the controversial battle for insurance reform. Actually, it had everything to do with how students will get large chunks of their financial aid, everything from scholarships to loans to online college grants.
One thing that has been seriously under reported over about this new legislation is the bill’s title. It’s in truth called “The Health Care and Education Reconciliation Act”. Most mainstream media has egregiously omitted that education reform is also part of this act, and if it goes according to President Obama’s plans, it will have an effect on all forms of schools, including online ones.
It should be noted this new bill addressed the education system from the ground up, so major parts of it concern elementary and secondary education. At the same time, it’s hard to deny the nation’s education system is in need of a considerable reconstruction, from the ground up. Students who graduate high school but aren’t able to read aren’t going to make the best college students after all.
The key bit of legislation though revolves around student loans. Back in the day, when students applied for them, they got the money straight from the federal government. When the legislature that initially created student law systems was signed by then President Lyndon Johnson in 1965, students got their loans directly from the federal government, which also administered them.
As time progressed and the administrations changed, it was decided it would save the government money if the administrative aspects were handled by banks. That turned out to not be the case when the banks started charging higher interest rates than the history of the entire program, as much as 19%. In the end more loans defaulted than ever before. Couple this with the current economic recession and the student loan program was hemorrhaging tax payer dollars.
One key aspect of the new Obama plan is it cuts out the banking middle men, again returning the student loan system completely back into the Board of Education’s hands. Obama expects that not only will there be less defaults because the interest rates will be lowered, but the profits generated from these loans will be plowed back into increasing the Pell Grant and related financial aid programs.
Another aspect of this program is targeting a large portion of money towards community and online colleges. The reasoning for this is that these forms of schooling simply cost considerably less than the bigger schools and have smaller war chests than the Harvard’s and MIT’s of the world. If the community college has an online division, that’s even better. What really matters is the school is an accredited Title IV institution.
“For a long time, our student loan system has worked for banks and financial institutions”, Obama said that day. “Today, we’re finally making our student loan system work for students and our families. But we’re also doing something more. From the moment I was sworn into office, I’ve spoken about the urgent need for us to lay a new foundation for our economy and for our future…we can rightly say the foundation on which America’s future will be built is stronger than it was one year ago.”
If you are a new student or someone who has been in the workforce for a while and planning to return to school, these college loans should be explored. Changing rules mean new information on everything from applications to your Pell grants. Even grants online are experiencing some expansion. Checking out everything that applies to your situation may mean quicker educational success than originally planned.
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