The landmark piece of Student Loan

30th March 2010, Obama signed the Fiscal Responsibility Law Student loan Aid (saffron) for legislation. This legislation is historic new student loan industry forcejament reorientation of all new loans through the Ministry of Education, to strengthen federal student loan initiatives for financial assistance, and put a controversial term federal loans to family Education (FFEL). I bless you through these changes, explains how it will affect the average student, and try to answer the burning questions you may have about student loan reform.

FFEL, and federal student loan: why it will go

Law of the Federal Family Education Loan Program was established in 1965 as a way to allow access to the university for students who need financial assistance. At this stage the Government has actively participated in creating student loans, but acknowledged the need. To create a loan option for student loans less severe, the government began allowing private banks to originate loans for students who are supported by federal funds. In essence, this creates an environment almost no risk for private banks to lend money to students and generate interest on borrowed funds. In addition, these banks have paid a subsidy as an incentive to the creation of these loans, the result is paid by the government guaranteed student loan funds to the bank, even if the debtor does not pay. Long and short: banks earn on both sides of the equation, and make lots of money doing very little.

To add insult to Student Loan injury, many FFEL lenders have been accused of deliberately poor customer service in an attempt to increase the crime rate. This difference is easy to see when the default rate for 2009: 7.2% for FFEL, 4.8% for the Direct Loan Program (ED.gov data.) This activity assumes that the Commission ignored many banks greater service recovery is FFEL right to recover termination FFEL student loan payments in some cases have been reported to be as high as 38.5% of the loan balance (Huffington Post).

The effect of the student loan reform bill Safra these grants, and the relationship between the private bank and the federal government has been dissolved. Ideally, it will release 61 billion U.S. dollars over the next 10 years to be reinvested in other initiatives (such as the Pell Grant program), and possibly pay federal deficits. Keep in student loan interest mind that this is a lot of sensationalism, but given the fact that our total deficit is currently in U.S. $ 12.07 billion, about 10 million U.S. dollars to pay for a drop in the sea, our national debt, but not count.