subject: Expansion Of College Aid Resources Good News For Students [print this page] On March 30, President Barack Obama went down to Northern Virginia Community College to sign what many in the media were calling his "health bill". True, a giant portion of the bill revolved around the controversial insurance reform, but that wasn't all this monumental piece of legislation was about. It also had to do with education and both traditional and online college grants and graduate school scholarships possibilities will come into play.
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.
Admittedly, a considerable amount of the education sections of the bill have to do with elementary and secondary schools. At the same time, who can deny that if this part of the education system isn't overhauled, the prospects of having primed students for graduate and post-graduate education becomes slim, if not none.
Probably the most important part of this education reform revolves around grant for online college. When the loans were initially created by then President Lyndon Johnson in 1965, students got the money directly from the federal government, which also administered them.
Over time, the government felt it could cut costs by having banks administer the money for them. Over the last few years though, this plan backfired. The banks began to feel entitled to charge much higher interest rates and pocket the difference. This resulted in interest rates starting to escalate to as much as 19%, and coupled with the current economic recession, the number of defaults escalated accordingly.
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."
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.
Admittedly, a considerable amount of the education sections of the bill have to do with elementary and secondary schools. At the same time, who can deny that if this part of the education system isn't overhauled, the prospects of having primed students for graduate and post-graduate education becomes slim, if not none.
The key bit of legislation though revolves around grant for online college. Back in the day, when students applied for them, they got the money straight from the federal government. When the legislature that initially created student law systems was signed by then President Lyndon Johnson in 1965, students got their loans directly from the federal government, which also administered them.
After a time, though, it was felt costs could be saved if the money was administered through banks. Over time, the banks felt they could charge higher rates than was initially planned. As the interest rates escalated, so did the number of loans that began to default. This was then coupled with the present day recession, and the government began to really lose money.
One key aspect of the new Obama plan is it cuts out the banking middle men, again returning the student loan system completely back into the Board of Education's hands. Obama expects that not only will there be less defaults because the interest rates will be lowered, but the profits generated from these loans will be plowed back into increasing the Pell Grant and related financial aid programs.
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.
