WASHINGTON – President Barack Obama prepared Tuesday to sign the piece of his sweeping health care overhaul that makes the government the primary lender to students and strips banks of that power.
Obama's hard-fought legislative victory packaged two of his domestic priorities. Obama already signed the bulk of the health care legislation, but a final set of tweaks provided a route for the education package, the largest rewrite of federal college assistance programs in four decades.
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.
Under the measure, private banks would no longer get fees for acting as middlemen in federal student loans. The government would use the 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.
Obama has touted the changes as a way to make college more affordable for students and their debt load more manageable after graduation. He used his weekend radio and Internet address to cite expected benefits for young people: more student lending, caps on those repayments and more money for minority colleges and universities.
"This reform of the federal student loan programs will save taxpayers $68 billion over the next decade," Obama said in his weekly address. "And with this legislation, we're putting that money to use achieving a goal I set for America: By the end of this decade, we will once again have the highest proportion of college graduates in the world."
The plan caps student loan repayment at 10 percent of a graduate's income when the law takes effect in 2014.