As a part of the health care reform bill President Barack Obama signed a long over due education reform bill as a part of the health reform package. College has become progressively more expensive and less affordable for the middle class in America. The education reform bill is absolutely essential.
The key points of the education reform bill is as follows:
1. Ends subsidies to special-interest private lending companies, cutting out the middle man and decreasing the cost of school loans.
Under the current program banks can act as the middle man for federally subsidized student loans, collecting billions of dollars in federal subsidies, protecting either government money or bank money from default. Under the new program, starting July 1, 2010 banks can still offer student loans, but they are not guaranteed by the government. Cutting out the banks as the middle man will create more money available for more and cheaper college school loans, coming directly from the government.
2. Doubles funding for Pell Grants to help more students afford a college education.
The extra money from decreased bank subsidies will go to more and larger Pell grants. Pell grants are targeted to low and moderate income students, more than $40 billion will go toward these grants. The maximum award will increase to $5,975 from $5,550 and the number of available grants will nearly double.
3. Will cap a graduate’s annual student-loan repayments at 10 percent of his or her income.
This will insure that every graduate can make their school loan payment, therefore decreasing the amount of school loan defaults and saving graduates credit ratings. For students who make their payments on time the government will forgive their balance after 20 years, instead of 25. Public service workers (teachers, nurses, police officers) or those in the military will see their loans forgiven after 10 years.
4. Helps an additional 5 million Americans earn degrees and certificates over the next decade, by revitalizing programming at our nation’s community colleges.
Community colleges, a growing population, will receive $2 billion over the next 4 years.
5. Increased funding to HBCU’s.
Over the next 10 years these colleges will receive an additional $2.5 billion in funding. Get more personal finance education here.