President Obama signed into law the last piece of his mammoth plan to overhaul healthcare Tuesday, and achieved another dramatic and far-reaching change with the very same pen stroke — revamping the way most Americas help pay for a college education.
The healthcare provisions and changes to the loan program for college students were sandwiched into a single piece of legislation — the budget reconciliation bill approved last week by the House and Senate.
via Obama signs reconciliation bill with major student loan change – latimes.com.
This is good news. I’ve gotten loans through my local bank and directly from the program through the financial aid office at my university and in my experience the second method worked my better. Tuition was taken directly out of the loans saving a step in billing and payment. Then, when there was a delay in the loans, there was no hassle because the financial aid office of the university was processing them and knew the issue.
By far the most ridiculous point made in this debate, however, was that made by Senator Charles E. Grassley (R-Iowa) who said
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that students would prefer getting such crucial financing from a banker they know rather than from anonymous bureaucrats.
“I don’t see how the students of this country are going to get the same service out of four call centers as they get from their individual banks.”
via Obama signs reconciliation bill with major student loan change – latimes.com
Perhaps things work differently in Iowa, but I have had no such experience. I got my student loans from my local band, Virginia based First and Merchants, which then became something else, then Sovereign, and is now a Bank of America. There may even have been another stop along the way.
But it doesn’t matter anyway, because my bank sold off my loan pretty quickly. My loan was being handled by someone else anyway. Maybe Chuck Grassley doesn’t have to go through call centers when he calls his bank, but most of America does!
What is missing from this reform is relief for those who have been out of college for some time. Student loans are unique in many ways, and one of those differences is that it is a loan you take out with no idea at all what your future income will be. Moreover, student loans are not taken care of when one declares bankruptcy. If you experience financial hardship you can put your loan in “forbearance,” but interest continues to accrue. I was excited about Obama’s proposal to cancel student loans after 20 years. It is no one’s interest to have people’s income tied up in payments on total interest that has become as much or more than the loan itself. It could be a real economic stimulus to free up those funds for people to spend.