President Obama signs student loan reform, making college more affordable for students and families

While most Americans continue to deliberate the positive and negative affects that the historic health reform bill will have on our health care system, current and future college students and their families should be excited about the new legislation as the bill also invests in higher education that will make college more affordable.

The new legislation will not only invest in higher education, but it will also bring meaningful reform to the current student loan system. The bill will put an end to a system that used taxpayer money to subsidize private bank loans to students and reinvests those $68 billion in savings toward making college more affordable as well as reducing the deficit.

"For almost two decades, we’ve been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks to act as unnecessary middlemen in administering student loans. So those are billions of dollars that could have been spent helping more of our students attend and complete college; that could have been spent advancing the dreams of our children; that could have been spent easing the burden of tuition on middle-class families.  Instead, that money was spent padding student lenders’ profits," President Obama explained to students during a speech at Northern Virginia Community College. "Now, it probably won’t surprise you to learn that the big banks and financial institutions hired a army of lobbyists to protect the status quo.  In fact, Sallie Mae, America’s biggest student lender, spent more than $3 million on lobbying last year alone...By cutting out the middleman, we’ll save American taxpayers $68 billion in the coming years -- $68 billion.  That’s real money -- real savings that we’ll reinvest to help improve the quality of higher education and make it more affordable.”

Below are some of the highlights of how the bill will help students and families pay for college:

• Double funding for Pell Grants since President Obama took office, to ensure that all eligible students receive an award, and that grants keep pace with the rising cost of college
• Invest in community colleges to help an additional 5 million Americans earn degrees and certificates over the next decade
• Increase support for historically black colleges and universities and minority serving-institutions, which have been particularly hard hit by some of the challenges facing all universities, and account for nearly sixty percent of the 4.7 million minority undergraduates in our country.
• Ease loan repayment by capping student loan payments at 10 percent of a graduate's discretionary income, with any remaining balance forgiven after 20 years. And those who go into public service after graduation can have their loans forgiven after 10 years.
• End government subsidies given to financial institutions that make student loans, switching to direct loans. This saves nearly $68 billion for college affordability.