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Student Associations Lobby for Bill to Revamp Student Loans (Page 1 of 2)
Student governments and organizations at colleges and universities nationwide are pushing lawmakers to pass legislation that supporters say will make acquiring a higher education more accessible and affordable.
The legislative measure, known as the Student Aid and Fiscal Responsibility Act (SAFRA), was passed by the House of Representatives on Sept. 17 in a vote of 253 to 171, largely along party lines. All but four Democrats voted for the bill, and only six Republicans also voted in favor. The bill is expected to be put to a vote on the Senate floor on Oct. 15.
The bill, if passed, would essentially mean an overhaul of the current college financial aid system, eliminating one of the two existing national programs that provides students and parents with federal college loans.
This landmark legislation would shut down the long-standing Federal Family Education Loan Program (FFELP), which issues federally guaranteed student loans to borrowers via banks, state organizations, and other private lenders. The government currently pays these private FFELP lenders a subsidy for the federal parent and student loans these lenders issue.
Under the SAFRA bill, all federal student loans would be issued through the second national student loan program, the Federal Direct Student Loan Program, which issues federal college loans directly to borrowers through the U.S. Department of Education, with no third-party involvement from a bank or other FFELP lender and thus with no government subsidies being paid to a middleman.
SAFRA supporters, which include many college student organizations, say that ending government subsidies to third-party FFELP lenders to originate federal student loans will save taxpayers $87 billion over the next decade which means more funds available for federal college grants and other higher education initiatives.
“FFELP is expensive for the government,” Kathleen Templin, president of the Associated Students of Northern Arizona University, told the NAU online newspaper, JackCentral. “They give money to banks, which in turn gives money to students. But because banks charge interest rates, the government pays a lot of money for lenders to give money out” (“Student Aid Act Passes in U.S. House, Due for Senate,” JackCentral.com, Sept. 24, 2009).
In fact, SAFRA allocates $40 billion of the projected $87 billion in savings to expand the Federal Pell Grant program, which targets low-income students.
Students Applaud Expansion of Federal Pell Grants
Several student governments from across the country have joined forces with the United States Student Association (USSA), the main voice for students on Capitol Hill, to organize meetings with legislators to press the importance of financing higher education in building a better American work force.
“A lot of students are not able to go to school because of funding,” said Teresa Mabry, the chair for the Women of Color Caucus on the USSA board of directors. “If were not getting [our message] out there, its not going to work.”
How to Save Money on Student Loans
There are a few ways in which you can maximize your student loan in order to save money. By using some simple techniques when looking for and closing on your loan, you can save a ton of money. One of the most popular options for saving money on your student loans is through consolidation, but that isn’t the only way. There are other tips that can help you, as well.
It is important to remember that the interest rate in your student loan is subject to change at the beginning of each July. Though student loans are usually pretty low and the rates are fairly stable, there is room for flocculation should the market present that scenario. If you have a low rate now, you can consolidate your student loans in order to lock in that rate.
Over the last few years, people have found success paying for their loan using automatic repayment. This way, you will be sure that the loans are paid on time. When your loans are paid on time, you will avoid the costly penalties that are associated with late or missed payments. In addition, you will save the trouble and cost of writing checks each month.
Be sure to always stay on time with your overall repayment plan. Putting off your payments may seem like a good solution in the short term, but it will cost you money in the long term. If you absolutely cannot repay your loan on time, then you must contact the lender in order to inquire about a deferment plan. If you are eligible, this can help you save money.
Make sure to research and choose the best payment option that is available on the market. There are many payment plans available to students depending upon your schedule and what your capability is. By choosing a suitable payment plan, you will help secure your financial future. Work hard to find a student loan that rewards you for being a responsible borrower. Many times, a lender will offer bonuses for good repayment. If you make on time payments over an extended period of time, find out if your lender is willing to reward your for it.
It is never too early to start thinking about student loan consolidation. This is one of the best ways to lower your monthly payments and capitalize on good interest rates. Interest rates for higher education are lower today than they have been in a long time, so you could save a ton of cash over the long run by locking in these rates. In the future, the rates could go up a significant amount. It doesn’t matter how large or small your debt is, either. School loan consolidation can help take a burden off of your shoulders very quickly. Students today can benefit from a new law that enables students to consolidate their loans while they are still in school. This can save you thousands of dollars as you get the ball rolling earlier, rather than later
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