Staff Editorial: Student Loans, Health Care and Congress–Oh My!
In the wake of the nation’s most controversial legislative move in years, one addendum to the bill was overlooked—until this week.
The addendum to the current health care bill actually has nothing to do with health care and everything to do with financial aid at colleges and universities across the nation.
It in essence would get rid of the “middle men,” the banks that receive money from the federal government and give that money to institutes of higher education for students applying for federal education loans, according to the Washington Post.
If the bill passes, a student applying for a loan would participate in a direct federal lending process through their college or university upon matriculation, and their loan would simply be held by the federal government.
This means that students who currently have loans would need to resign their master promissory notes (the legal agreement a student signs with a lender accepting student loan funds) in a timely fashion in order to keep receiving federal loans, which may seem inconvenient and potentially problematic at first glance.
However, several students have received letters in recent months saying that their loans have been sold from bank to bank, finally ending up in the hands of the federal government. This can be even more confusing and unsettling for students than the prospect of redoing some of the steps in the loan process seems to be.
The Washington Post reported that billions of dollars of federal money previously going to private financial institutions would now go to increased Pell Grants, which are grants given (not loaned) to needy students who can’t pay for their education.
This is also beneficial, because some of these banks are now jumping into the private loans sector, relieving the fierce competition for private loans that have diminished with the damaged economy. Before, when students and parents would apply for private loans, they would often be rejected due to credit problems from the five years prior to the date of their loan application.
Now, with the banks in the private loan sector, the rate of rejection and the likelihood of needing a cosigner (which can sometimes be disastrous) will lessen.
Bills often have addendums like these that the public doesn’t know about. This particular one, however, has come to the forefront because of the direct and beneficial impact it has on the lives of all students nationwide, including those who attend UMW.
Despite the controversial nature of the health care bill, this addendum reminds us all that legislation isn’t always as it seems. No matter how we feel about a national health care system, something good will come of this.