Thursday, November 8, 2012

Aid Resources Good Is News For Students

On March 30, President Barack Obama went down to Northern Virginia Community College to sign what many in the media were calling his "health bill." True, a giant portion of the bill revolved around the controversial insurance reform, but that wasn't all this monumental piece of legislation was about. It also had to do with education and both traditional and online college grants and financial aid possibilities will come into play.
If anyone paid attention, the actual title of the bill Obama signed was "The Health Care and Education Reconciliation Act". The second half of that title was grossly ignored by most media pundits, but if it goes through as planned it will have an incredibly positive impact on the future of education as a whole, including online colleges.
Admittedly, a considerable amount of the education sections of the bill have to do with elementary and secondary schools. At the same time, who can deny that if this part of the education system isn't overhauled, the prospects of having primed students for graduate and post-graduate education becomes slim, if not none.
The key bit of legislation though revolves around student loans. Back in the day, when students applied for them, they got the money straight from the federal government. When the legislature that initially created student law systems was signed by then President Lyndon Johnson in 1965, students got their loans directly from the federal government, which also administered them.
Over time, the government felt it could cut costs by having banks administer the money for them. Over the last few years though, this plan backfired. The banks began to feel entitled to charge much higher interest rates and pocket the difference. This resulted in interest rates starting to escalate to as much as 19%, and coupled with the current economic recession, the number of defaults escalated accordingly.
One key aspect of the new Obama plan is it cuts out the banking middle men, again returning the student loan system completely back into the Board of Education's hands. Obama expects that not only will there be less defaults because the interest rates will be lowered, but the profits generated from these loans will be plowed back into increasing the Pell Grant and related financial aid programs.
Another aspect of this program is targeting a large portion of money towards community and online colleges. The reasoning for this is that these forms of schooling simply cost considerably less than the bigger schools and have smaller war chests than the Harvard's and MIT's of the world. If the community college has an online division, that's even better. What really matters is the school is an accredited Title IV institution.
"For a long time, our student loan system has worked for banks and financial institutions", Obama said that day. "Today, we're finally making our student loan system work for students and our families. But we're also doing something more. From the moment I was sworn into office, I've spoken about the urgent need for us to lay a new foundation for our economy and for our future...we can rightly say the foundation on which America's future will be built is stronger than it was one year ago."