On Thursday the NYT reported a successful overhaul of the current Federal Student Loan Program. Though the reform has garnered little media attention with Obama's health care reform still drawing criticism, praise and close analysis from media outlets, it is an encouraging piece of hard-won education reform. Republican lawmakers again tried to smear democratic progress as a "Washington takeover" of the student loan industry, though the existing program is already administered by the government and wrapped up in bureaucracy. The legislation was attached to the health care reform bill and sets out the following gains for US taxpayers:
In the new plan private banks will continue to make money by servicing loans, though they will not be making loans with government money.
- $61 billion in tax-payer savings over 10 years, with $40 b. reinvested in in higher education
- Automatic increases in Pell Grants, tied to inflation (a $36 b. investment over 10 years)
- Reduce the minimum share of income required in student loan remission to 10% from 15%
- Extend loan forgiveness after 20 years of repayment, down from 25
In the new plan private banks will continue to make money by servicing loans, though they will not be making loans with government money.