March 30, 2010
President Barack Obama signed a new bill into law Tuesday in Virginia, which eliminates banks from the student loan process.
Officials at Piedmont Virginia Community College said college tuition continues to rise, while students' ability to pay continues to shrink. They said the new law will help relieve some of the strain on students in this economy.
Educators said though higher education and students will get billions less than originally proposed, "a half a loaf is better than no loaf at all," PVCC President Frank Friedman said.
The law is still touted as the biggest change in decades to federal aid for students in higher education.
"We're very pleased that Congress has passed that legislation after [a year full of] after discussion and debate," Friedman said.
The law takes banks out of the student loan process and will increase the amount of money given to students from federal grants, including Pell grants, the main form of federal financial aid. Friedman said it won't cost taxpayers anything.
"It's actually not coming out of taxpayer's pockets," Friedman said. "It's coming out of fees that were going to banks who were providing loans for students to go to colleges.
"We can't afford to waste billions of dollars on giveaways to banks," Friedman continued. "We need to invest that money in our students. We need to invest in our community colleges. We need to invest in the future of this country."
So far this fiscal year, PVCC has processed more than $6 million in aid, and from that, more than $3 million in Pell grants. That's already up significantly from last fiscal year.
Obama said the law will save the country billions in the next decade, but critics are skeptical and say this is just the first step in government taking over higher education.
President Obama signed legislation in Virginia Tuesday that affects students nationwide.
U.S. Rep. Tom Perriello was at the president's side as Obama signed a bill that changes the way students get loans. The measure makes the government the primary lender to students, which means the banks no longer have all the power.
Obama signed the bill at Northern Virginia Community College in Alexandria. The legislation falls under the umbrella of the newly passed health care reform bill.
Under the measure, private banks will no longer get fees for acting as middlemen in federal student loans. The government will then use the savings to boost Pell grants, meaning lower interest rates and higher approval rates on student loans.
Obama said the changes are a way to make college more affordable for students and to make their debt more manageable after graduation.
"We can't afford to waste billions of dollars on giveaways to banks," Obama said. "We need to invest that money in our students. We need to invest in our community colleges. We need to invest in the future of this country."
The program will affect local schools. So far this year, Piedmont Virginia Community College has processed more than $6 million in aid, and from that, more than $3 million in federal Pell grants. Those numbers are up from last year.
With the new law, Obama said Pell grants will more than double, which means more federal aid to Virginia students.
Obama said the new federal student loan program will save tax payers billions of dollars. It will also help achieve Obama's goal for the United States to have the highest proportion of college graduates in the world.