On July 1 getting government loans for college changed for the better. Rather than banks, now the Department of Education handles federally guaranteed student loans. Bank lobbyists were kicking and screaming when the change was added to the health care reform bill earlier this year. The government has removed banks as the middleman for federally guaranteed student loans, and ended the billions of taxpayer dollars in subsidies paid to banks for pushing paper on those loans.

Source of article: Federal student loan move ends taxpayer gravy train for big banks by Personal Money Store

Billions in tax dollars saved with federal student loan overhaul

About $ 68 billion in savings over the next 10 years will be realized by ending student loan subsidies, according to government estimates. As of July 1, all colleges and universities participating in federal student loan programs will be required to offer all new loans through the Federal Direct Loan Program (FDLP). Students and taxpayers can be served better by the FDLP, the government said.

What changes with federal student loans?

The Department of Education’s Direct Loan program now handles all government loans for college. USA Today reports that the Federal Family Education Loan Program (FFELP), which had allowed banks and other commercial lenders to offer federally guaranteed loans, has been eliminated by the FDLP. The change affects PLUS (Parent Loan for Undergraduate Students) for parents and PLUS loans for graduate and professional degree students as well as subsidized and unsubsidized Stafford Loans for undergraduate and graduate students.

Students get scholarships, banks lose easy money

The Federal Pell Grant program reaps many of the benefits of cutting banks out of government loans for college. Students from lower-income families qualify for Pell Grants, which aren’t repaid. Native Times reports the maximum Pell Grant increases by $ 200 this fall to $ 5,500, and stay there until 2014.

New program brings new requirements for students

Now to get a federal student loan applicants must file electronic forms available at studentloans.gov. The volume of student applicants is putting pressure on colleges and universities to meet their responsibilities under the program. Students and their parents are being advised by financial aid directors to contact their schools financial aid office with questions as soon as possible.

More data about this topic at these websites:

usatoday.com

nativetimes.com

kenoshanews.com

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