College Students Excited About Fed Control of Student Loans

Obama Overhauls Student Loan System

It’s a problem facing cash-strapped college students all across the country.

“I couldn’t go to my first school because I couldn’t afford to go,” said Paris Hines.
Hines passed on the University of Maryland and decided to enroll at Montgomery College -- a two-year school with tuition at just less than $4,000. Even with the attractive price tag many students are forced to take out student loans, which poses another problem.
“The banks are taking advantage of the students as of right now because the interest rates are so high,” said Montgomery College student Holly Devinney. “When you come out of high school, you’re 18, you don’t know what you’re getting yourself in to."
Today, President Barack Obama put an end to the bank lending program by signing the higher education portion of the Health Care Reform Bill. Starting July 1, all student loans will go through the federal government.
“By cutting out the middle men, we’ll save American taxpayers $68 billion in the coming years,” said President Obama.
In his second year, Montgomery College student Addisu Biri now participates in the federal lending program and he notices a big difference.
"Now the interest rates are like one point something rather than like 26, and it’s actually a lot cheaper, and I don’t have to pay back until I graduate, so it helps out a lot,” said Biri.
At Montgomery College more than 75 percent of students receive some type of financial aid. But administrators said the biggest gift doesn’t come in the form of student loans, but Pell Grants, something the federal government doesn’t require students to pay back.
A portion of the $68 billion in savings will go toward funding the Pell Grant program, something of which administrators at Montgomery College advise their students to take advantage.
“We’d like to save them now, and they can spend it later and perhaps go into less debt,” said Melissa Gregory, college director of student financial aid.
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