Parents and students celebrate changes that will lower college costs, provide a level playing field for banks providing college loans, and increase overall reporting.
Parents and college students struck a huge blow to banks today with the passing of a package of college legislations to renew the Higher Education Act. This new legislation addresses a myriad of student and institutional concerns.
Relationships Between Schools and Banks
This new legislation prohibits many of the improprieties that have been going on between banks and schools, including many of the changes in the legislation proposed by Andrew Cuomo. For more on Andrew Cuomo and his reaction to several New York state Universities and Banks, check out Student Loans and Redlining.
Increased Federal Grants to Incoming Students
Under the new law $17.3 billion will be provided to students over the next five years in addition to the current Pell Grants they already receive. These “Promise Grants” are designed to increase Pell Grant allotments by about $5,000.
Income Based Repayment
Students will only have to pay at most 15% of their income towards student loans. Additionally, with this plan no matter how much the student has paid, assuming he/she is paying the 15% max, their loan will be forgiven after 25 years of payment. This is one half of the legislation that is trying to promote more students to work in the public sector.
Loan Forgiveness for Public Sector Workers
The other half of the legislation that promotes students to work in the public sector this states that students loans will be forgiven after 10 years of repayment if they have worked in the public sector for that time period.
Increase in Maximum Student Working Income
Students will now be allowed to make an additional $3,000 before they begin to lose some of their grants and loan money. They will allow students more financial flexibility during their school year and summers.
School Reporting Changes
Schools will now be required to significantly increase their reporting to the government. One of the more interesting changes to parents will be the increased reporting around revenue and expenses. Schools will be required to report their actual costs of providing their service. This is designed to shame schools that are simply profiteering off students, and it is designed to provide parents and students more information about where their tuition dollars are going.
There is also additional reporting around race and ethnicity of students and their financial aid packages. This seems to be designed to ensure equitable distribution of aid to all students.