Government back in charge of student loans under Congressional bill passed today

WASHINGTON (AP) — More needy college students will have access to bigger Pell Grants, and future borrowers of government loans will have an easier time repaying them, under a vast overhaul of higher education aid that Congress passed Thursday and sent to President Barack Obama.

The legislation, an Obama domestic priority overshadowed by his health care victory, represents the most sweeping rewrite of college assistance programs in four decades. It strips banks of their role as middlemen in federal student loans and puts the government in charge.

The House passed the measure 220-207 as part of an expedited bill that also fixed provisions in the new health care law. Earlier Thursday, the Senate passed the bill 56-43.

The switch to direct government loans will result in savings to boost Pell Grants and make it easier for some workers to repay their student loans. In addition, some borrowers could see lower interest rates and higher approval rates on student loans.

The legislation has a wide reach. About half of undergraduates receive federal student aid and about 8.5 million students are going to college with the help of Pell Grants.

Sen. Tom Harkin, D-Iowa, praised the bill as a victory for middle-class families.

“Now they’ll have the assurance that their kids will be able to afford to go to college and again, when they get out, they won’t be burdened with a huge debt,” Harkin said.

The changes do not go as far as Obama and House Democrats wanted. That is because ending fees for private lenders would save less money than they anticipated, according to budget scorekeepers. The bill is now expected to save $61 billion over 10 years.