Senate approves student loan reform Forum

[vanwinkle]

Included in the health care reform modification bill that (finally) passed the Senate today was some much-needed student loan reform. The biggest impact this will have on law students is the elimination of federal backing for third-party lenders. No longer will you have to go to Discover or Chase Student Loans to get approved for high-interest 8.5% GradPLUS loans; instead, all schools starting this summer will offer "direct lending" which cuts out the corporate lending middleman and brings a lower interest rate. Loans are approved directly by the school's financial aid office and you don't need outside approval. This kicks in this summer, so everyone should benefit from it whether they're a new or continuing law student this fall.

The legislation also reduces IBR to 10% of above-line income instead of 15%, and forgives non-PI loans after 20 years instead of 25... but this part will only apply to loans initiated after July 1, 2014. Nobody currently in or applying to law school will benefit from this part of the reform (although it will definitely benefit future generations of law students). This makes me sadface, but it's still kind of nice because an expansion of IBR reaffirms the government's commitment to it (and gives them room to cut back in the future without actually eliminating the program, if it comes to that).

This has passed the Senate, which was the real hurdle. It should be approved by Congress and signed by the President by the end of this week.

Source: http://www.nytimes.com/2010/03/26/us/po ... loans.html

(Update: It has cleared the House as well. http://news.yahoo.com/s/ap/20100326/ap_ ... e_overhaul)

[Jules Winnfield]

I read this last night and it seems to be pretty solid. It just sucks that the IBR reduction and PI loan forgiveness won't go into effect until 2010.

But I am certainly pleased that the middleman is cut out and that the Federal government will be disbursing funds directly to the students. That's good and will, hopefully, keep a cap on interest loans that would have otherwise been raised/exploited by the meddling banks. I'd still like more to be done for students who opt to pursue careers in the PI sector (ie-have loans forgiven after a shorter amount of time/lower interest rates).

But slow motion is better than no motion. Kudos to Congress, the Senate and the President!

[FunkyJD]

Interesting summary of the changes:

http://www.smartmoney.com/Personal-Fina ... ent-Loans/

More:

http://www.filife.com/stories/student-l ... hcare-bill

[twintipping_bumps]

What about this:

"They will also restrict individuals who can take advantage of these terms to new borrowers of new student loans starting July 1, 2014."

That seems to indicate our loans - class of 2013 - won't qualify for the 10% IBR.

[FunkyJD]

What about this:

"They will also restrict individuals who can take advantage of these terms to new borrowers of new student loans starting July 1, 2014."

That seems to indicate our loans - class of 2013 - won't qualify for the 10% IBR.

This is correct, as vanwinkle pointed out. Sucks.

Do I smell a campaign issue?

[twintipping_bumps]

Cool for the future - there are major road blocks at the steps of high level education, and as a nation we should want the highest percentage of citizens educated in the best way possible in order to maintain our place atop an increasingly global market - but bad timing for us!

[Visirale]

Wait, can I still go to a private bank to get out 180,000k in loans for law school? 5k a year in pell grants ain't gonna cut it.

[vanwinkle]

Wait, can I still go to a private bank to get out 180,000k in loans for law school? 5k a year in pell grants ain't gonna cut it.

^^^ Troll fail.

[Visirale]

Wait, can I still go to a private bank to get out 180,000k in loans for law school? 5k a year in pell grants ain't gonna cut it.

^^^ Troll fail.

... Not trolling at all.

[Xnegd]

Thanks for the explanation, I hadn't read it yet!

[vanwinkle]

Wait, can I still go to a private bank to get out 180,000k in loans for law school? 5k a year in pell grants ain't gonna cut it.

^^^ Troll fail.

... Not trolling at all.

1) You cannot receive Pell grants for graduate programs. You will get $0 in Pell grants for law school.

2) You will remain eligible for loans up to the full amount of your law school tuition and fees plus costs of attendance. This includes the same Stafford and GradPLUS loans you were otherwise eligible for. The only difference is that ALL these loans will come directly from your law school and not require finding a third-party lender for some of them. This will also result in lower interest rates.

You won't get the third-party loans, but you won't need them, unless you've made yourself ineligible for government loans. You could still get private loans if you had to but they aren't government-backed and thus aren't eligible for programs like IBR.

[jstn1104]

Does this change whether the loans require a credit check?

[FeuerFrei]

.

[Teoeo]

=(, damnit, that 10 percent would REALLY be nice GRR

[vanwinkle]

Last paragraph of the second article:

"Meanwhile, the changes aren't scheduled to go into effect until July 1. Assuming they go through, that is just in time for next year's class of college freshmen to get their loans under the new rules and to enter school confident that the financing options they need will be there throughout their college career."

Why wouldn't class of 2013 be able to use the 10% cap instead of 15?

The 10% cap part is for loans originated after July 1, 2014. Since the Class of 2013 will be graduated and not taking new loans then, it won't apply to them at all. It only applies to loans taken out after that date, which means only to students who are enrolled after that date.

[ozarkhack]

Last paragraph of the second article:

"Meanwhile, the changes aren't scheduled to go into effect until July 1. Assuming they go through, that is just in time for next year's class of college freshmen to get their loans under the new rules and to enter school confident that the financing options they need will be there throughout their college career."

Why wouldn't class of 2013 be able to use the 10% cap instead of 15?

The 10% cap part is for loans originated after July 1, 2014. Since the Class of 2013 will be graduated and not taking new loans then, it won't apply to them at all. It only applies to loans taken out after that date, which means only to students who are enrolled after that date.

Would it be possible to qualify by originating a new IBR-qualified consolidation loan on July 2, 2014?

I assume that consolidation does not technically refer to a newly originated loan. But if so ...?

[vanwinkle]

Would it be possible to qualify by originating a new IBR-qualified consolidation loan on July 2, 2014?

I assume that consolidation does not technically refer to a newly originated loan. But if so ...?

I was wondering this myself and will be keeping an eye out for an answer.

[Teoeo]

Would it be possible to qualify by originating a new IBR-qualified consolidation loan on July 2, 2014?

I assume that consolidation does not technically refer to a newly originated loan. But if so ...?

I was wondering this myself and will be keeping an eye out for an answer.

Hrm, thats interesting actually. I wonder who would know this kind of stuff; although I guess by the time we get to 2013/2014 we will have a pretty good idea of our options.

[Anonymous Loser]

I expect mindless vitriol from Fox, but this is ridiculous.

Updated March 26, 2010
DANA PERINO: Where's the Outrage Over What Just Happened to Student Loans?
By Dana Perino - FOXNews.com
Competition and choice have been taken away in the student loan market. If the tables were turned, Democrats would be crying foul and demanding an ethics investigation. The American people deserve to know what happened.

So, here we are -- with a majority of Americans feeling distinctly un-American as a partisan takeover of health care was engineered last weekend. But do Americans realize that Congress just took over student loans as well? Unlikely.

Now, not only will government increasingly be making decisions about individuals' health care, but students will also have to deal exclusively with the government to get the financing they need for college. The government will be in charge of the delivery of $1 trillion in federal student loans over the next 10 years. That means 19 million students will have no where to call but to 1-800-DEPT-OF-ED. -- I'm sure the calls will be handled in the order in which they were received. Good luck with that. Competition and choice have been taken away in the student loan market. Let's face it, this experiment can only end badly.

It's frustrating that a law this sweeping was swept under the Obamacare rug. The Senate never introduced a student loan reform bill. It never held a hearing. And proposed changes to the student loan program were never even considered by lawmakers at the committee level.

"Schoolhouse Rock's" Bill is red faced with shame. What's worse is that The Wall Street Journal editorial page and The Washington Times reported on Thursday about certain Democratic Congressmen giving certain non-profit companies in their states non-competitive carve outs...And these are companies that already didn't pay taxes. And there was even a special "carve out" for Democratic Sen. Kent Conrad of North Dakota. But it was taken out at the last minute because it was just too unseemly. At least we know they have standards!

If the tables were turned, Democrats would be crying foul and demanding an ethics investigation. The American people -- and its students -- deserve to know what really happened.

[Anonymous Loser]

Would it be possible to qualify by originating a new IBR-qualified consolidation loan on July 2, 2014?

I assume that consolidation does not technically refer to a newly originated loan. But if so ...?

I was wondering this myself and will be keeping an eye out for an answer.

Hrm, thats interesting actually. I wonder who would know this kind of stuff; although I guess by the time we get to 2013/2014 we will have a pretty good idea of our options.

The text of the bill indicates that changes to the IBR program are applicable to "new borrowers," which seems to suggest that consolidation loans, even if originated on or after July 1, 2014 will not qualify.

`(e) Special Terms for New Borrowers on and After July 1, 2014- With respect to any loan made to a new borrower on or after July 1, 2014--
`(1) subsection (a)(3)(B) shall be applied by substituting `10 percent' for `15 percent'; and
`(2) subsection (b)(7)(B) shall be applied by substituting `20 years' for `25 years'.'.

[Teoeo]

Would it be possible to qualify by originating a new IBR-qualified consolidation loan on July 2, 2014?

I assume that consolidation does not technically refer to a newly originated loan. But if so ...?

I was wondering this myself and will be keeping an eye out for an answer.

Hrm, thats interesting actually. I wonder who would know this kind of stuff; although I guess by the time we get to 2013/2014 we will have a pretty good idea of our options.

The text of the bill indicates that changes to the IBR program are applicable to "new borrowers," which seems to suggest that consolidation loans, even if originated on or after July 1, 2014 will not qualify.

`(e) Special Terms for New Borrowers on and After July 1, 2014- With respect to any loan made to a new borrower on or after July 1, 2014--
`(1) subsection (a)(3)(B) shall be applied by substituting `10 percent' for `15 percent'; and
`(2) subsection (b)(7)(B) shall be applied by substituting `20 years' for `25 years'.'.

TY, hopefully they will rethink that, TLS lobbying anyone?

[Italia8183]

"Even as the Democrats’ decision to attach the student-loan overhaul to the health care package virtually ensured its passage, banks fought fiercely up to the last minute, prompting some lawmakers, like Senator Ben Nelson, Democrat of Nebraska, where Nelnet has its headquarters, to cast their vote against the overall bill."

This is the problem with politics. Our politicians represent corporate interests as much as they represent individual constituent interests.

[vanwinkle]

I expect mindless vitriol from Fox, but this is ridiculous.

Updated March 26, 2010
DANA PERINO: Where's the Outrage Over What Just Happened to Student Loans?
By Dana Perino - FOXNews.com
Competition and choice have been taken away in the student loan market. If the tables were turned, Democrats would be crying foul and demanding an ethics investigation. The American people deserve to know what happened.

So, here we are -- with a majority of Americans feeling distinctly un-American as a partisan takeover of health care was engineered last weekend. But do Americans realize that Congress just took over student loans as well? Unlikely.

Now, not only will government increasingly be making decisions about individuals' health care, but students will also have to deal exclusively with the government to get the financing they need for college. The government will be in charge of the delivery of $1 trillion in federal student loans over the next 10 years. That means 19 million students will have no where to call but to 1-800-DEPT-OF-ED. -- I'm sure the calls will be handled in the order in which they were received. Good luck with that. Competition and choice have been taken away in the student loan market. Let's face it, this experiment can only end badly.

It's frustrating that a law this sweeping was swept under the Obamacare rug. The Senate never introduced a student loan reform bill. It never held a hearing. And proposed changes to the student loan program were never even considered by lawmakers at the committee level.

"Schoolhouse Rock's" Bill is red faced with shame. What's worse is that The Wall Street Journal editorial page and The Washington Times reported on Thursday about certain Democratic Congressmen giving certain non-profit companies in their states non-competitive carve outs...And these are companies that already didn't pay taxes. And there was even a special "carve out" for Democratic Sen. Kent Conrad of North Dakota. But it was taken out at the last minute because it was just too unseemly. At least we know they have standards!

If the tables were turned, Democrats would be crying foul and demanding an ethics investigation. The American people -- and its students -- deserve to know what really happened.

I dunno, that only seems about as ridiculous as the rest of their mindless vitriol.

[darknightbegins]

Interesting summary of the changes:

http://www.smartmoney.com/Personal-Fina ... ent-Loans/

More:

http://www.filife.com/stories/student-l ... hcare-bill

God your Tar is hot.

[FunkyJD]

She cleans up nicely.