OPINION | Federal financial aid legislation fails to solve the runaway cost of college
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On March 21, the Student Aid and Fiscal Responsibility Act of 2010 passed as a part of the health care reconciliation bill.Under this legislation, the federal government has made college affordable, insured the increased success of community colleges and put American education back into the hands of the students … April Fools!Despite the bill’s inability to solve all higher education problems, you folks should listen up, ’cause this affects you.The Student Aid Fiscal and Responsibility Act, includes some great measures, including decreasing the amount a borrower must pay in student loans per month to 10 percent of their discretionary income. SAFRA allows loans to be forgiven for responsible borrowers after 20 years of repayment in place of the current 25-year policy.At first, the legislation appears sweeping. In an unprecedented move, SAFRA eliminated the Federal Family Education Loan program and will put all federal student loans under the Federal Direct Loan Program by July 1.This action drew a lot of heat from the private sector about loss of jobs and government takeover while others see it as an important step to President Barack Obama’s goal of having the highest proportion of college graduates in the world by 2020.Before SAFRA, federal student loans were distributed through two programs. Both programs administered similar loans at similar interest rates with similar repayment options.One program, which SAFRA preserves, is the Federal Direct Loan Program, in which students loans are administered through the Department of Education and its contractors and funded through the U.S. Treasury.The second program was the Federal Family Education Loan program, administered by private financial institutions which were subsidized to lend to students.The University of Minnesota has been serviced by the Federal Direct Loan Program since 1995, and since then the financial aid office has felt good about the switch.”It’s been a much better system for students, and you get the money faster and they know where the money is,” said Kris Wright, director of financial aid at the University. “They’re not dealing with a lender who is … Continue Reading