Obama signs student loan reforms into law
Declaring himself an ally of American students in a fight against commercial banks, President Obama on Tuesday signed a new law designed to free up more money for higher education by ending the role of banks as “middlemen” in the college lending process.
The changes to the college loan business come as part of the final piece of the healthcare reform law, which Obama enacted in a signing ceremony at a community college in the Virginia suburbs of D.C.
Speaking to a crowd of students, Obama credited Democrats in Congress with tackling “a sweetheart deal in federal law” that guaranteed billions of dollars in profits for banks to offer college loans.
Money that should have been spent advancing the educational interests of students “instead was spent padding student lenders’ profits,” the president said. “It probably won’t surprise you to learn that the banks hired an army of lobbyists” to fight it.
“But I didn’t stand with the banks and the special interests,” Obama said of himself and the Democratic members of Congress who joined him at Northern Virginia Community College for the event. “We stood with you. We stood with America’s students.”
It’s a message the president has unspooled at several public appearances since the passage of the historic healthcare legislation last week, as he undertakes a tour that is both victory lap and sales pitch.
As members of Congress gear up for a grueling campaign season in advance of fall mid-term elections, the Democratic president is intent on helping keep the party majorities by promoting those who joined him.
The vote was not an easy one for many lawmakers, and every new round of public opinion polling is a reminder that the healthcare vote could break against them if the White House sales strategy doesn’t work as planned.
In both speech and substance, Tuesday’s event offered a preview, casting the healthcare law as part of a bigger Democratic plan to help American families against monied interests who have profited in their time of economic distress. Just as Democrats fought the insurance companies to reform health care, the president said, they put an end to the role of banks in the college loan process.
“We can’t afford to waste billions on giveaways to the banks” when American competitiveness depends on the fortunes of its students, Obama said.
The White House estimates that the changes in the lending program will general $68 billion in savings over the next 10 years, money that can be used to help expand the Pell Grant program.
The new law will also put a cap on college graduates’ annual loan payments, so that they only have to pay back 10% of their income.