Barack Obama signs the health care and student loan reforms into law.

Starting July 1 some of the promised student loan changes that president Barack Obama signed into law at NOVA will take effect.

The main change involves the way loans are handled. In the past, banks were given a subsidy for the loans they made. This left the government with the financial risk if students defaulted and gave banks the profits if the loan was repaid.

This change has the effect of saving the federal government up to $68 billion, but according to the banking industry will cost jobs in the financial sector. Some of the savings will go to reducing the federal deficit, but much of it will go back into bettering higher education.

About $36 billion in savings will go into the Pell Grant program, which provides funds for low-income students. Pell Grants at one time provided up to 77 percent of the cost of college, but today they cover only about 30 percent. Had the reforms not been passed, the average Pell Grant would have fallen to $2150 for the 2010-2011 school year, down from $5,350 of the previous year.

Other savings will be plowed back into community colleges, historically black colleges and universities, and Hispanic-serving institutions.

One of the most popular elements of the bill is more stringent capping of student loan repayments to a person’s income. New loans will be capped to 10 percent of a person’s discretionary income. After 20 years some loans may even be forgiven. However, this change only goes into effect in 2014 and only for loans made after that date.

According to Organizing For America, the successor to Obama’s grassroots organization, the new law will allow about 5 million students to enter schools.

Jill Biden, an English teacher at NOVA, said, “I have seen firsthand the power of community colleges to change lives and serve as a gateway to opportunity for students.”

As part of the Obama administration’s efforts to raise the importance of community colleges, the reforms – along with the health care bill – were signed into law at the Alexandria campus on March 30.

By: Joshua Davis

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