Expansion Of College Financial Aid Resources Good News For Students

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 apply for a pell grant online.

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.

What will have the most impact on the college level begins with online scholarships reform. When they were first initiated by then President Lyndon Johnson in 1965, the loan money came directly from the government, which also handled all the administration aspects of the program.

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.

By cutting out the banking middlemen, again returning the student loan system to the federal government, President Obama expects there will less defaults due to lowered interest rates. In addition, the profits generated from these loans can be plowed back into increasing the Pell grant and related financial aid programs. The Pell might actually jump from a $5,350 to a $6,000 ceiling in about one year.

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...we can rightly say the foundation on which America's future will be built is stronger than it was one year ago.

by: Natasha Bright

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