The Unwanted Post-College Roommate

Debt.

With the rising costs of college by way of tuitions hikes that seem to have no end in sight, the majority of students turn to loans to aid the cost of their attendance at institutions of higher learning. After college, hundreds of thousands of graduates take those loans home with them, which have now translated into debt they will be paying off for years to come.

While the original healthcare reform bill was signed last week, on Tuesday, President Barack Obama signed the reconciliation bill that, in addition to tightening some loose healthcare reform bolts, makes the government a direct lender to students seeking help in paying for college. In the reconciliation bill was the The Student Aid and Fiscal Responsibility Act.

The most sweeping redo of college assistance programs since the 60’s, this act strips the banks of their role as the proverbial middlemen in federal student loans and places them into the hands of the government.

Instead of giving a cut to the banks, the government will now be able to boost Pell grants with that recovered money and make it easier for some graduates to repay their student loans. Additionally, higher approval rates on loans and lower interest rates will now be seen by some future borrowers.

To put it in perspective, as it stands today about half of all undergraduates receive federal student aid of some sort, and an additional 8.5 million students go to college with the help of Pell Grants. These changes will not, however, go into effect until 2014, so future college students will be the true beneficiaries.

For more information on the bill and its stipulations, click here.