Despite the recent overhaul of student loans, the new Obama legislation will not have immediate implications for financial aid policies or loan procedures at Mount Holyoke, according to Kathy Blaisdell, director of student financial services.
President Barack Obama’s higher education budget increases Pell Grants and eliminates private loans from banks, replacing them with direct government lending. Students will go through their college to borrow directly from the government. The new law anticipates savings of $68 billion over 11 years.
“The big news related to the legislation is that banks will no longer be part of the federal loan program—all lending will be directly from the federal government,” Blaisdell commented. “Mount Holyoke has been part of the Direct Loan program since 1997, though, so our processes will not change as a result of this legislation.”
“In the future, there is good news in terms of loan repayment, as there will be expansion of the Income-Based Repayment benefit,” Blaisdell said. Graduates working in some non-profit service areas with lower salaries may be eligible for reduced monthly payments and possibly some loan forgiveness after a period of repayment.”
She disclosed that 61 percent of the class of 2009 borrowed student loans at one point in their undergraduate career and the average total student loan of those who borrowed was $23,008—46 percent of borrowed federal loans averaging $15,551.
Religion major Daeun Park ’11 said that while she is currently a recipient of federal loans, she is unsure if the new system will achieve its purported beneficial ends.
“With Obama’s new policy, I think that our school may increase tuition, taking advantage that the government will try to offer more loans to students. I feel like more students will think that they’re getting more financial support from the government, when in fact, students can end up having more debt to pay off after graduation because tuition is higher.”
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