Current and future students of Bloomsburg University will experience changes to financial aid that involve more accessible loans and less time until loan forgiveness. President Obama's "Health Care and Education Reconciliation Act of 2010" will go into effect July 1.
This historic piece of legislation was officially signed by the president on March 30 as part of the effort to amend the Patient Protection and Affordable Care Act that was signed into law on March 23. It was the third amendment to this particular health care bill, and one that specifically addressed the issue of higher education.
One of the main aspects of the Health Care and Education Reconciliation Act is the fact that students will no longer have to borrow their loans from banks and private lenders. They will instead borrow directly from the federal government, thus eliminating the use of a middleman. According to whitehouse.gov, the non-partisan Congressional Budget Office, "ending these wasteful subsidies will free up nearly $68 billion for college affordability and deficit reduction over the next 11 years."
President Obama called the Act a triumph over an "army of lobbyists" like Sallie Mae, the nation's largest student lender, which spent nearly $3 million to put brakes on the legislation. "For almost two decades, we've been trying to fix a sweetheart deal in federal law tat essentially gave billions of dollars to banks," which "was spent padding student lenders' pockets," Obama said.
The president and supporters of the bill believe this will make loans more accessible to eligible individuals, meaning more students will be able to afford higher education. By July 1, anyone who applies for financial aid will do so directly in accordance with this law.
Amanda Kishbaugh, the assistant director of Bloomsburg's financial aid department, said that while the Act will increase the amount of money going to federal Pell Grants, students who already receive a Pell will not see a change. The money goes to providing grants for students who were not previously eligible, creating an estimated 820,000 additional grants by 2020.
Kishbaugh said that the Act will streamline the loan process, putting students in contact with one servicer who they will make payments to directly on their loans.
"It's good for one main reason," Kishbaugh said. "The federal government will not pull of the loan. We have had major issues when lenders have pulled out of loans, so students were forced to go and find a new lender, especially the way the economy is right now."
"For the foreseeable future," she said, "The federal government is not going to change the way they do loans."
Steven Kotch, a senior English major with a minor in professional writing, is positive about the new bill.
"I'm in favor of it," Kotch said. " Before the bill was introduced, our health care was ranked in the 30's. Plus, we're one of the last countries to socialize health care. It's about time we caught up."
Joe DiGiacomo, a graduating mass communications major, said, "For those coming into or staying in school, I guess it might be a good thing in the sense that eliminating the middle man might save some money. Of course, working directly with the government always seems to screw over the little people in some way, so I really don't know."
According to its website, Bloomsburg University plans to make the switch from its current loaning practice of the Federal Family Education Loan Program (includes Stafford, PLUS, and Graduate PLUS) to the William D. Ford Federal Direct Loan Program. The change won't affect the amount students are awarded, but it does mean they'll need to fill out new paperwork.
This new ‘paperwork' comes in the form of an electronic document. The BU site has noted that incoming and current students will have to fill out a Master Promissory Note (MPN) in order to get a Direct federal loan.
The University plans to have information concerning this new loan application process on their website by May 1. Students who need a loan for the Summer 2010, Fall 2010, or Spring 2011 shouldn't fill out or submit their applications until this new information is posted.
Summer loans will be delayed due to the necessity of training for the financial aid and business offices. Normally summer loans get processed in early May, but training for the new Act will delay processing by at least two weeks. The delay will not be an issue for students only taking second session summer classes, but students in first and third session classes will not see their loans completed by the beginning of the term. However, Kishbaugh said, the business office is aware of these issues, and students will not be penalized in any way.
Amber Tallon, a senior creative writing major, said, "It's definitely a good thing. It's not fair to have debt looming over your head just because you wanted an education. The only thing I'm worried about is how not paying off the rest of my loan will affect or damage my credit score."
Another interesting element to the Health Care and Education Reconciliation Act is the Expanded Income Based Repayment program (IBR). Whitehouse.gov confirms that instead of having to pay 15% of their income toward paying back loans, borrowers will only have to pay 10%. The site says, "More than 1 million borrowers would be eligible to reduce their monthly payments. The payment will be reduced by more than $110 per month for a single borrower who earns $30,000 and owes $20,000 in college loans, based on 2009 figures."
Marisa Peterson, a senior English major, said, "I'm against the federal government getting involved in the private sector on this scale. They're trying to restructure loan companies so that more students can afford college, so more people will be trying to get loans. Where is all this money supposed to come from if the people in before you aren't repaying their loans? It seems to me like it would eventually become very top-heavy."
Up-and-coming freshmen are showing concern for the issue of debt as well. Jim Capozolli, a second-semester computer science major, said, "As a student, I'm thrilled. But as a citizen, I'm concerned, because it's just going to add a heap of debt somewhere else down the line. What will happen when our debt is so high that other countries stop recognizing our money as legitimate?"
Dr. Michael McCully, chair of the English department, remains skeptical as well, but his statement is ultimately optimistic.
I support [the government] making changes that are going to benefit the young people that are going to be saddled with the incredible amounts of debt that will inevitably accumulate if something isn't done," McCully said. "It might not be perfect, but it's a step in the right direction."
Concerns of students and professors for the Health Care and Education Reconciliation Act remain divided among the populace. While some look forward to the changes it will bring, others fear for what these changes might mean in not only the conditions of their own futures, but of those in the generations to come.
Kishbugh stresses the importance of holding tight and allowing time for loans to be processed.
"Be patient, and realize that this is a new process for everyone," she said.
With the Health Care and Education Reconciliation Act being one of the first steps towards health care reform that the nation has seen in years, supporters, opponents and skeptics can agree that it's at least something. Whether it will have a positive or negative impact in the end still remains to be seen.
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