President Obama signed legislation on Tuesday to expand college access for millions of young Americans by revamping the federal student loan program in what he called “one of the most significant investments in higher education since the G.I. Bill.”
Mr. Obama went to a community college where the wife of his vice president teaches to draw attention to the student loan overhaul attached to the final piece of health care legislation that passed last week. In signing the bill, Mr. Obama put the final touches on his health care program but used the occasion to highlight the education provisions.
“That’s two major victories in one week,” he told students and guests at the Alexandria campus of Northern Virginia Community College, where Jill Biden teaches English. While he praised the health care overhaul, the president said, “what’s gotten overlooked amid all the hoopla, all the drama of last week, is what’s happened with education.”
The new law will eliminate fees paid to private banks to act as intermediaries in providing loans to college students and use much of the nearly $68 billion in savings over 11 years to expand Pell grants and make it easier for students to repay outstanding loans after graduating. The law also invests $2 billion in community colleges over the next four years to provide education and career training programs to workers eligible for trade adjustment aid after dislocation in their industries.
The law will increase Pell grants along with inflation in the next few years, which should raise the maximum grant to $5,975 from $5,550 by 2017, according to the White House, and it will also provide 820,000 more grants by 2020.
Students who borrow money starting in July 2014 will be allowed to cap repayments at 10 percent of income above a basic living allowance, instead of 15 percent. Moreover, if they keep up payments, their balances will be forgiven after 20 years instead of 25 years — or after 10 years if they are in public service, like teaching, nursing or serving in the military.
Mr. Obama portrayed the overhaul of the student loan program as a triumph over an “army of lobbyists,” singling out Sallie Mae, the nation’s largest student lender, which he said spent $3 million on lobbying to stop the changes. “For almost two decades, we’ve been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks,” he said. The money, he said, “was spent padding student lenders’ pockets.”