Law comes from Student-lending reform

This morning, the President of the United states approved a law that will create a huge overhaul of student lending industry which shall eliminate $ 61 billion in federal subsidies to all private lenders. The bill was promoted by Obama as a means of making higher education more affordable and the debt afterwards more manageable. If debt loads were more manageable, fewer recent graduates would have to resort to payday loans.

All constraints that are part of borrowing money to fund higher education have been heated points of debate. "For a long time, our student loan system has worked for banks and financial institutions," Obama stated. "Today, we're finally making our student loan system work for students and all of our families."

Banks are taking hits

Under the new student-lending law, the government will make loans straight to students. Banks will be allowed to service and collect student loans they have already made, however they won't be able to issue them any longer. Banks will lose a multibillion dollar income source as a result. Of course the reform is strongly opposed by Sallie Mae and other private lenders.

Opponents fear over-governing and job cuts

Many of the opponents contend the law will give the government an unwarranted federal takeover of the student loan industry. They suggest how the law will give students less lending possibilities and will make the lending industries lose thousands of jobs when the nation is already performing poorly in that area. Democratic lawmakers have long sought to end bankers’ roles as student-loan middlemen and substitute them with a direct federal-lending system. Even though it seems like nearly a partisan issue, the reform was offered by Bush in his office several times.

Proponents say all budget reforms create job losses

Proponents will argue that the law for student lending creates as many jobs as it takes away. They also say job losses are systemic and can be a part of any kind of budget reform measure. Livelihoods hinge on all industries and all projects. Proponents suggest that taking out banks will save the taxpayers at least $ 68 billion over the next 10 years. Much of the cash saved could be used to boost and expand federal grant programs for higher education. MSNBC says that the law will cap annual student loan repayments at 10 percent of what the person's income is, will extend more funds to community colleges, and will grant $ 2.55 billion to historically black universities and colleges.