Most Americans Support Student Loan Reforms
Online, September 9, 2010 (Newswire.com) - A recent survey by CNN shows that a significant majority of Americans support President Obama's changes to the way federally subsidized student loans are made and paid back. The telephone survey of over one thousand adults found that 64% approved of the reforms, while 34% disagreed with the changes (2% had no opinion on the subject). The changes have been praised by student activists as well as many Democratic members of the House of Representative and Senate, who have lauded the reforms as "long-overdue".
Not all of the response has been positive however - with the reforms coming in for heavy criticism from many Republican lawmakers and from representatives of the lending industry. Critics contend that the changes will reduce students' lending options and eliminate jobs at many banks and private lenders. Conwey Casillas, a VP at Sallie Mae, the largest student-loan company in the US, said in a statement on March 30th that the new laws would "force Sallie Mae to reduce our 8,600-person workforce by 2,500."
The changes to the way that student loans are made will not affect private personal lending, small business loans or the way that banks and other lenders offer small business loans.
The changes aim to reduce the role and influence that private banks and lenders have over the student loan industry, freeing up the monies formerly earned as windfall profits by the loan industry in order to make more funds available for loans to students and to make possible reductions in the maximum loan payments made by graduates, who are struggling to keep up in the current economy.
Education Secretary Arne Duncan commented in a conference call with reporters, "the banking industry has had a free ride from taxpayers for too long ... they have had their bailouts. They have had their subsidies, and they've paid themselves very well while working families and students are struggling to make ends meet." Secretary Duncan said taxpayers paid up to $8 billion a year to subsidize student loans.
Currently, students with low incomes and large loan balances don't have to pay more than 15 percent of their incomes each month on their loans. The new rules lower the maximum to 10 percent of income.
The reforms also expand the popular Pell Grant program, which assists lower-income students. The new law provides $13.5 billion for help to pay for projected shortfalls in the program for the next two fiscal years, and increases the maximum award to $5,550 next year and nearly $6,000 by 2017.
The new law still will permit private lending institutions to make private small business loans. Click Here to find out if you pre-qualify for a personal loan or a small business loan. A small business loan of $10,000 to $250,000 may help you reach your financial goals.
