Financial aid officials from nearby universities hailed President Barack Obama’s signing of the Health Care and Education Reconciliation Act of 2010 yesterday as landmark legislation that could bring changes to financial aid programs at institutions of higher education across the country.
The reform of the federal financial aid program sends a “very powerful public policy message,” said Harvard College Director of Financial Aid Sally C. Donahue.
“I certainly think that we as a nation should be investing even more dollars in our federal financial aid program,” Donahue said. “Access to education is critically important to our nation.”
The legislation includes the Student Aid and Fiscal Responsibility Act, which will provide an expanded government direct-lending program and eliminate the role of private financial institutions as intermediaries in providing student loans, saving an estimated $68 billion over 11 years.
MIT Director of Student Financial Services Elizabeth M. Hicks said SAFRA—which she referred to as a “landmark legislation for the Obama administration” and a “real victory for education”—would bring about an “overdue” reform of the federal financial aid system.
The act also allocates an additional $36 billion to expand the Federal Pell Grant Program—a need-based federal financial aid program that provides assistance for students from low-income families—over the next 10 years.
According to Donahue, even though Harvard’s financial aid program is able to meet the full need for all students without loans, the increase in Pell Grants—which amount to approximately 3 percent of Harvard’s grants—will be beneficial.
The legislation also contains provisions to change income-based repayment plans.
For loans taken out after July 1, 2004, the legislation will reduce the share of income a graduate must devote to loan payments from 15 to 10 percent, and the loan forgiveness period from 25 to 20 years.
These changes will impact Harvard undergrads who go on to attend graduate schools and influence their decisions in choosing career paths, Donahue said.
But Tufts Director of Financial Aid and Co-Manager of Student Financial Services Patricia Reilly predicted that the overhaul will have “very little benefit for students,” according to an article in the Tufts Daily.
“The loans are the same; the terms and conditions are the same. It’s an administrative project for the school,” Reilly said in the article.