A new law was signed Tuesday gives students a break with more money for Pell grants and only having to deal with one lender when it comes to student loans. President Barack Obama signed the new law this week.
The law, tacked on to the health care bill, eliminates a $60 billion program that supports private student loans with federal subsidies and replaces it with the government directly lending to students.
The nonpartisan Congressional Budget Office estimates $61 billion in savings over 10 years, with an estimated $32 billion being pushed into Pell grants.
Eastern New Mexico University psychology student Christine Neurater said she is a little apprehensive about the changes, which are effective July 1, because they leave only the federal government as a loan provider and banks aren’t competing for loan customers.
“I really don’t like that,” Neurater said. “When you get to choose your loan, it kind of helps you to know what you are trying to accomplish ... You have no choice in it.”
ENMU Director of Financial Aid Brent Small said that might end up being the law’s best feature.
“(An) 18- to 19 year-old student coming into school to borrow a student loan doesn’t have to make a decision to what bank or entity has the best interest rates,” Small said. “If they did need a loan, it would give them one resource to go to that would be beneficial to all students.”
It also helps the university because they only have to deal with one entity when it comes to student loans, which is the Department of Education rather than several different banks, Small said.
“The different lenders take a different amount of time to process the paperwork,” said Marissa Hyde, a communications and public relations major at ENMU, who works in the financial aid office. “Having one main group, it is going to take the same amount of time for everybody. We don’t have to play the guessing game of when which lender is going to send a student their money.”
Small said information on the law will be sent to students around April 15.
Nicole Johnson is taking her prerequisites at CCC in pursuit of a nursing degree. Johnson said she didn’t know much about the changes, but she thinks the intent is good.
“If it is helping more people out with Pell money,” Johnson said, “then it is better for them (federal government) to do it that way and eliminate the middle man, as long as you don’t have to start paying it back until after you graduate.”
Under the current system, private banks are subsidized to grant the loans, while the federal government assumes the risk. Republicans opposed the change, calling it an unnecessary government takeover of the program.
Clovis Community College Financial Aid Specialist Chris Garcia said he’s hopeful the increased access to grants will push more to attend college.
“Obviously, if there is more money for students, we’re going to get more students coming in to further their education,” Garcia said. “It’s (about) bringing in more students and retaining the students that we do have.”