Education is expensive

Your whole life you hear of the stereotypical college student: the broke and starving student, spending money on textbooks rather than food. Then when you actually arrive at college, the stereotype becomes a reality.

It is no secret that college students are strapped for cash—taking out unaffordable loans to pay for a term’s tuition is what most students resort to. Several people resort to this method of payment because students just do not have the time to work out a solid financial plan.

Borrowing money is a tricky business, so for a college student the most readily available source of funds (usually a loan) is what they turn to. There is a plan to overhaul student loan programs, included in the health care reconciliation bill that passed in the U.S. House recently, which is under debate in the Senate.

The legislation would cut banks out of federal loans, which is planned to help community colleges and low-income students and, overall, make the act of borrowing money simpler for students. The goal is to make college more affordable to people. One word comes to mind: finally!

Let’s face it—a bachelor’s degree is the new high school diploma. And people are being pushed into debt beyond imagination trying to obtain it. Then most people have to attend grad school, which is another debt-filled education.

Anything that can be done to make college more affordable will help those planning to attend a post-high school educational institution, as well as overall making the world a better place with more educated people.

In Oregon, college students are no strangers to expensive education, with constant increases in tuition and campus housing. This legislation will make higher education more affordable and accessible to everyone.

The legislation will get rid of banks as subsidized intermediaries in the administration of federal loans and will require students to borrow directly from the government. It will not eliminate the involvement of banks in student loans as a whole because they will still be allowed to make private student loans.

So just how much do Oregon college students borrow from the federal government? According to the Oregon Independent Colleges Association, this year students who are attending Oregon public and private universities, colleges, trade schools and community colleges have borrowed $1.5 billion from the government.

According to The Oregonian, this loan legislation is estimated to save taxpayers $61 billion over the next 10 years. $36 billion of that money would be used to increase the federal need-based Pell Grant scholarship. Oregon public and private college students have received about $210 million in Pell Grants this year.

The bill would increase the maximum Pell Grant by $200, to $5,550 for next school year. By 2017, it would be up to $5,975.

Oregon is taking this initiative and running with it. Joe Holliday, vice chancellor for student success initiatives, told The Oregonian that all seven state universities in Oregon have or will shift to using only direct loans from the government for financial aid.

Gary Andeen, president of the Oregon Independent Colleges Association, said that most of Oregon’s private universities are also making the switch.

Not only would this change simplify the financial aid process for students, families and administrators, it would also make federal loans more affordable for borrowers to repay. It would accomplish this by reducing monthly maximum payments from 15 percent of discretionary income to 10 percent after 2014.

Overall, the legislation simplifies the whole loan process and appears to be on the side of students, looking out for them and their money as opposed to being on the side of banks. Of course it will not solve all of the problems college students face, but it is a good start to the money problem.