With all the fervor concerning health care reform, less attention has been given to the “Education” component of The Health Care and Education Reconciliation Act.
So what does this education reform mean to college students?
In short, the roughly $60 billion investment will attempt to make higher education more accessible and affordable.
- increasing the funding and stability of Pell Grants, leading to a maximum award increase of $425 and an additional 800,000 awards by 2017
- $2 billion investment into community colleges over the next four years
- $2.55 billion investment into America’s Historically Black Colleges and Universities (HBCUs) and Minority Serving-Institutions (MSIs)
- those who take on student-loans after July 1, 2014 will be able to have their monthly repayments capped at 10 percent of their disposable income, with their balance forgiven after 20 years if borrowers are consistently responsible with payment
- this forgiveness period is only 10 years for public service workers, such as teachers
- student-loans will be administered directly by the government, rather than through private lenders with government guaranteed loans. This aspect of the plan seeks to cut government subsidies to financial institutions, which is projected to free up nearly $68 billion over the next eleven years
- the Free Application for Federal Student Aid (FAFSA) is also slated for reform, making filling it out simpler for students, where “the amendments will include questions that conform to the student, instead of the other way around, and make it easier to upload tax information.”
The overall objective of this is to increase college graduates by 20 percent over the next decade commensurate with the increase in college graduates around the world.
However, these reforms are not without their potential short comings.
- Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, is not enthusiastic about the increases to Pell Grants, calling the projected increases “anemic”, noting that “Over 10 years, the maximum Pell Grant is not going to keep up with inflation, let alone college tuition inflation”
- in addition, as a result of loan reforms, many private student-loan providers could be forced to make layoffs. The student-loan giant Sallie Mae is expected to cut about one-third of its total workforce of 8,500 employees nationwide
- the benefits of these reforms will not be tangible to students and potential students for another four years
- the new loan caps and forgiveness periods will not be retroactive
Regardless, these reforms are Unprecedented and thoroughly ambitious, and are the shot in the arm the American education system desperately needs.
for a video by Dr. Jill Biden explaining the importance of these reforms, click here.