Student loans change proposed by Obama

Posted by admin on March 2nd, 2009

The new 2010 budget introduced by President Barack Obama contains a proposal to move federal student loans into the U.S. Department of Education’s direct-loan program.

Currently, private financial institutions that lend money to students receive subsidies from the government under the Federal Family Education Loan Program. Sallie Mae is the largest of these lenders.

Without the funding, private lenders do not have much incentive to offer student loans, as they do not typically generate much revenue for banks.

But the program has faced criticism over the years for its expense and has recently come under scrutiny due to the economic turmoil on Wall Street, which led to an unreliable supply of funds for higher education.

According to a Department of Education news release, the change is aimed at making loans “reliable, stable and efficient.”

The budget also includes a provision that the Federal Pell Grant program will be tied to inflation, which Education Secretary Arnie Duncan said will open more education opportunities to low-income students.

“The new funding announced today represents a significant expansion of our federal student aid programs, providing more dollars to allow more students to attend more schools,” he said.

provided by Credit.com

Tags: new loan policy, sallie mae, student loans

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This entry was posted on Monday, March 2nd, 2009 at 12:51 pm and is filed under College Scholarship and Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.