Because of the shaky economy and the new budget cuts for education by Gov. Chris Christie, New Jersey college students have a lot more to worry about when it comes to funding and student loans next semester. However, some of that worry can be lifted off students’ shoulders thanks to the Health Care and Education Affordability Reconciliation Act, which was signed by President Obama on March 30. This act will change the way loans are handled — loans will now go directly from the federal government to students instead of private lenders enjoying government subsidies and guarantees. These loans, arranged directly with the university, will make borrowing and repaying students loans easier as students will be able to communicate with their college directly regarding their loan amount and its status.
Loans will have the same setup as the Federal Family Education Loan Program. The only difference is who is now funding the loans. Loans taken from private lenders and banks have become bothersome for many students. They had to go through a bank and then get approval from the school for the amount, leaving some students confused on the loan’s status.
The transition from bank loans to college ones may be beneficial to some extent, but since not much is known about the act thus far, there are questions: Will the program eventually help every student? (Some banks did not allow borrowers to continue applying for loans after they had reached a certain amount.) Will the school be able to give a loan to the same student for varying amounts throughout their university career or stay? These questions need to be answered in order for students to support this new law. If the university cannot offer these services then the new bill is less worthwhile, for many students will have to find others ways of producing money for their tuition.
Besides reworking the way students apply and take out loans, the new law will also change the rules for repayment. The amount the graduate needs to pay will be reduced to 10 percent of his or her income, down from 15 percent. This will be helpful to many graduates because the burden of loan repayment will be lessened.
In theory, the law will generate $61 billion in savings over 10 years, and some of that money will be used to increase Pell grants, which is also good news for students.
Rider’s office of Financial Aid will be sending out more information to the students concerning the new law as soon as possible. Although finals are quickly approaching, students need to make sure that they keep some of their focus on financial aid, especially since this new bill has been set into place.
Overall the Health Care and Education Affordability Reconciliation Act holds much promise for students. The direct borrowing from our college could allow for a hassle-free agreement between the student and the university. Students will no longer have to take out private loans from banks and lenders. Thankfully, the new affordability act will take effect very soon, allowing students to begin the transition.
This weekly editorial expresses the majority opinion of The Rider News editorial board and is written by the Opinion Editor, Angelique Lee and the Assistant Opinion Editor, Heather Shupe.