ABC News' Sunlen Miller and Mary Bruce report:
Calling it a “momentous week for America” President Obama used his weekly address to tout the health care bill passed into law this week, but highlighted the largely overshadowed student loan reforms that also passed in the reconciliation bill on Thursday.
“Education. Health care. Two of the most important pillars of a strong America grew stronger this week. These achievements don’t represent the end of our challenges; nor do they signify the end of the work that faces our country. But what they do represent is real and major reform,” Obama said.
The student lending overhaul ends the current program that subsidizes banks and other financial institutions, allowing students instead to borrow directly from the federal government. The bill, which first passed the House in September, also would greatly expand the Pell grant program for low-income students. The reforms also aim to revitalize community colleges and increase support for minority-serving institutions and historically-black colleges.
“Year after year, we’ve seen billions of taxpayer dollars handed out as subsidies to the bankers and middlemen who handle federal student loans when that money should have gone to advancing the dreams of our students and working families,” Obama said. “But this time, we said, would be different. We said we’d stand up to the special interests, and stand up for the interests of students and families. That’s what happened this week. And I commend all the senators and representatives who did the right thing.”
The legislation would save an estimated $61 billion over 10 years. Universities that participate in federal lending have just a few months, until July 1, to switch their financial aid systems to the new “direct lending” program. Starting in 2014, the legislation will also cap a graduates’ annual student loan repayment at 10 percent of their income.
Republican opponents of the legislation have denounced it as yet another “government takeover,” and the banks, not surprisingly, have lobbied hard against this switch.
On Tuesday, the president will sign the fixed reconciliation bill into law at a community college in Northern Virginia in order to highlight the education reforms.
-Sunlen Miller and Mary Bruce