Student loans. Many students have them and few know exactly how they are going to pay them back. But with the passing of a new bill last week, it is about to get a bit easier.

A new bill revamping the student loan process was passed last week by the House and the Senate as a part of President Barack Obama’s health care reform bill.

According to an article in the New York Times, commercial and private banks will no longer provide student loans with federal money and the Pell grant system will be increased for needy students. In addition, students will then repay loans after graduation based on a certain percentage of their income.

Director of Financial Aid Erin Chiaro said, “The new bill eliminates all private lenders from making federal Stafford or Plus loans and all universities and colleges must participate with the Federal Direct Lending Program.”

In other words, the U.S. government has now taken on the role of direct lender in terms of student loans.

“The only change to Fairfield University students is that they will have to complete a new master promissory note (MPN) with the U.S. Dept. of Education in order to borrow either a federal Stafford or Plus loan,” he explained. “Everything else remains the same for the student.”

Senior Erin Shea said, “While I agree that regulation needs to be in place, I think the government is trying to over-extend themselves in this instance.”

“I think this bill will provide students with many benefits. Pell grants will be increased and the new repayment plan should aid students,” said Stephanie Stadig ‘10.

“It will give new graduates more financial stability to start their careers, find that first apartment, and get themselves going,” she continued.

Breaking down the new student loan package

  • Private banks and middlemen will no longer provide students with federal loans.
  • Students will now go through their financial aid office to apply for government-issued loans.
  • Repayment plans, a huge addition to the bill, will depend on 10 percent of their incomes. This applies to loans taken out after
  • July 1, 2014.

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