ALEXANDRIA, Virginia — president obama on Tuesday signed legislation to expand access to college for millions of young Americans by revamping the federal government student loan program in what he called “one of the most significant investments in higher education since the GI Bill.”
Mr. Obama went to a community college where his vice president’s wife teaches to draw attention to the student loan overhaul attached to the latest health care law passed last week. By signing the bill, Mr. Obama put the finishing touches on his health care agenda, but took the opportunity to highlight the education provisions.
“It’s two major wins in one week,” he told students and guests at the Alexandria campus of Northern Virginia Community College, where Jill Biden teaches English. As he praised the health care overhaul, the president said: ‘What has been overlooked amid all the hype, all the drama over the past week is what has happened. passed with education.”
The new law will eliminate fees paid to private banks to act as intermediaries in issuing student loans and use a large portion of the nearly $68 billion in savings over 11 years to expand Pell grants and enable students to repay outstanding loans more easily after graduation. The act also invests $2 billion in community colleges over the next four years to provide education and job training programs for workers eligible for trade adjustment assistance after their industries are dislocated.
The law will increase Pell grants in line with inflation over the next few years, which is expected to raise the maximum grant to $5,975 from $5,550 by 2017, according to the White House, and it will also provide an additional 820,000 grants now until 2020.
Students borrowing money from July 2014 will be allowed to cap repayments at 10% of income above a basic living allowance, instead of 15%. In addition, if they keep their payments, their balances will be canceled after 20 years instead of 25 years – or after 10 years if they are in public service, such as teaching, nursing or military service.
Mr Obama described the overhaul of the student loans program as a triumph over an “army of lobbyists”, pointing to Sallie Mae, the nation’s largest student lender, who he said spent $3 million lobbying to stop changes. “For nearly two decades, we tried to resolve an out-of-court settlement in federal law that basically gave the banks billions of dollars,” he said. The money, he said, “was spent lining the pockets of student lenders.”
But Sallie Mae said the law would cost jobs, telling news outlets she may have to cut a third of her 8,500 jobs nationwide. Senator Lamar Alexander, a Republican whose state of Tennessee is home to big players in the private student loan sector, said the changes overall would cost 31,000 private sector jobs.
In a statement, Mr Alexander said students would be overcharged on their loans with the proceeds to be used to pay the health care law, and he lamented the government getting deeper into the loan business . “The motto of the Obama administration,” he said, “turns out to be, ‘If we can find it in the yellow pages, the government should try to do it.’ ”
House Republican Leader Representative John A. Boehner of Ohio criticized both the health and education components of the bill, calling them “two job-killing government takeovers that are already hurting our economy”.
Mr Boehner added: “As the White House continues to ‘sell’ this new law, we are seeing the same pattern we saw last year: the more the American people learn about it, the less they like it.”