The tide has turned in federal financial aid
– and students will be the benefactors. The newly minted U.S. Department of Education’s Direct Loan Program will now administer federal financial aid, cutting out the middlemen banks that once profited on doling out these funds to students.
Amidst all of the changes, “student loans
are in transition, and those who use them need to pay particular attention right now as the U.S. Department of Education's Direct Loan Program takes responsibility for lending,” The Daily Press
Financial Aid & the Federal Government: Overview of New Legislation
According to the New York Times
, President Obama recently passed legislation that allows the Department of Education to directly provide students with financial aid loans. This new law eliminates any fees paid to private banks, as banks will no longer serve as intermediary parties between students and their access to college loans. Without banks acting as middlemen, an estimated $6 to $7 billion dollars of federal money will be saved annually, benefiting the government, taxpayers, and students, according to the Congressional Budget Office.
As outlined by the legislation, as of July 2014, students set to borrow money for college will be permitted to, “cap repayments at 10 percent of income above a basic living allowance, instead of 15 percent.”
Adding to this advantage, students who maintain responsible repayment histories will have their college
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