Financial aid has long been notorious for putting students into deep debt upon graduation from college. Most students end up paying off their debt for decades, and many struggle to keep up with their payments as they must simultaneously seek a steady job right out of school. The recent financial aid reform that rocked Washington strives to make financial aid less of a burden on already responsibility-wracked graduates so that they may more effectively find their feet after working hard to earn their degrees.
A vast majority of college students enrolled in universities seek financial aid to help fund their higher educational careers. The cost of attending college has been steadily increasing. In fact, tuition rates tend to increase about eight percent every year, according to FinAid. This means that every nine years, the cost of attending a university can double, making financial aid a necessity if students are to earn a college degree. Yet, federal financial aid has also been a double-edged sword. While it helps students pay for tuition, it also drains their future bank accounts and can negatively affect their credit reports if they happen to miss payments while struggling to find a stable career.
The financial aid reform bill seeks to remedy just that, striving to save those who take out federal financial loans thousands of dollars and keep them out of debt. One way that it endeavors to do so is by capping a new borrower’s loan payment to just 10 percent of his or her net income, rather than the current mandate of 15 percent. In addition, all borrowers who diligently keep up with their payments will have their loans forgiven after 20 years rather than the current 25 year standard. This would save many borrowers thousands of dollars in the end and also more quickly rewards those who are responsible with making payments. Another way that the financial aid reform will benefit borrowers is that it will cut out the middle man, allowing students to take out financial aid loans directly from their schools rather than through a private bank.
The financial aid reform also will benefit a number of education reform measures. It will reward $2.55 billion to historically black and minority colleges and universities such as Hispanic and tribal-serving schools. It will also invest $2 billion in community colleges because these schools have been proven to open the doors to higher education and better employment opportunities.
This overhaul of federal financial aid has been lauded by many students desperate to fund their college careers. It will also undoubtedly help as tuition rates continual to rise. For more information on the financial aid reform, visit the National Association of Student Financial Aid Administrators page which summarizes the key points of the reform.
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