Obama Signs Bill on Student Loans

PETER BAKER

ALEXANDRIA, Va. – President Obama signed legislation Tuesday to expand college access for millions of young Americans by revamping the federal student loan program in what he called “one of the most significant investments in higher education since the G.I. Bill.”

Mr. Obama traveled to a community college where the wife of his vice president teaches to draw attention to the student loan overhaul attached to the final piece of health care legislation that passed last week. In signing the bill, he put the final touches on his health care program but used the occasion to highlight the education provisions.

“That’s two major victories in one week,” he said to a hall full of students and other guests at the Alexandria campus of Northern Virginia Community College, where Jill Biden teaches English. While he touted again the health care overhaul, the president said, “what’s gotten overlooked amid all the hoopla, all the drama of last week is what’s happened with education.”

The new law will eliminate fees paid to private banks to act as intermediaries in providing loans to college students and use much of the nearly $68 billion in savings over 11 years to expand Pell Grants and make it easier for students to repay outstanding loans after graduating. The law also invests $2 billion in community colleges over the next four years to provide education and career training programs to workers eligible for Trade Adjustment aid.


The law will increase Pell Grant grants along with inflation in the next few years, which should raise the maximum grant to $5,975 from $5,550 by 2017, according to the White House, and it will also provide 820,000 more grants by 2011. Including money from last year’s stimulus program and regular budget increases, the White House said Mr. Obama has now doubled spending on Pell Grants.

Students who borrow money starting in July 2014 will be allowed to cap their repayments at 10 percent of their income above basic living requirements, instead of 15 percent. Moreover, if they keep up their payments, they will have any remaining debt forgiven after 20 years instead of 25 years – or after 10 years if they are in public service, such as teaching, nursing or serving in the military.

Mr. Obama portrayed the overhaul of the student loan program as a triumph over an “army of lobbyists,” singling out Sally Mae, which he said spent $3 million to stop the changes. “For almost two decades, we’ve been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks,” he said. He said the money “was spent padding student lenders’ pockets.”

But Sallie Mae said the law would end up costing jobs. The loan company has told news outlets that it may have to eliminate a third of its 8,500 jobs nationwide.

The president was introduced by Jill Biden and accompanied by Speaker Nancy Pelosi, Education Secretary Arne Duncan and Representative George Miller, the chairman of the House education committee who shepherded the student loan measure into law. Mr. Obama said he had asked Mrs. Biden to host a White House meeting this fall on community colleges.

Addressing health care, Mr. Obama acknowledged that the new program “won’t fix every problem in our health care system in one fell swoop” but called it a “major step forward toward giving Americans with insurance and those without a sense of security when it comes to their health.”

The Republican National Committee countered with a statement citing various news reports about doctors and medical companies expressing concern about taxes on medical devices and tanning salons, cuts in Medicare payments to hospitals and other elements of the new law. The R.N.C. release was headlined: “Small Businesses, Doctors Continue to Brace for Costs of Obama’s Government Takeover of Health Care.”