Written by:
Shali Zhu

How Will the Health Care Bill Affect Students?

If you have watched any news lately, you know that Congress just passed the historic legislation that pledges to overhaul the U.S. health care system. But do you know how the bill will affect college students like you? If you are on your parents’ insurance plan, for instance, you will now be allowed to remain on their policy until the age limit of 26 or until you are out of school, whichever comes earlier. This provision, says Rob Mellen, who teaches political science and public administration at Mississippi State University, will be able to “help out students who can't afford their own health care and haven't graduated yet."

Also included in the health care package that was passed on March 21st is a student loan bill aimed at restructuring a 40-year-old student loan program that impacts millions of students each year. A recent article from the New York Times reports that one key measure in the effort to revamp the bank-based loan program is to “force commercial banks out of the federal student loan market, cutting off billions of dollars in profits in a sweeping restructuring of financial-aid programs and redirecting most of the money to new education initiatives.” This means from now on, student loan organizations like Sallie Mae will no longer receive guaranteed federal subsidies to lend money to students. Instead, according to a report by CBS News, the bill will redirect the savings it acquires from breaking the ties with these private lenders toward the $36 billion in new spending for the Federal Pell Grant Program, which provides need-based grants to students in financial need. However, despite this seemingly impressive increase in the amount of grant money available, the maximum Pell grant for any student will increase by only $350 over the next ten years, from $5,550 in the 2010-11 academic year to $5,900 in the 2019-20 academic year, explains Mark Kantrowitz of the Web site Finaid.org.

Nevertheless, the student loan provision will also attempt to alleviate some of the pain of paying back the educational loans by decreasing the proportion of income a graduate needs to dedicate to repaying the loan and by hastening loan forgiveness process. The New York Times article reports that for students who take out loans after July 1, 2014, only 10 percent of their post-graduation income will have to be devoted to the loan repayments, whereas students who take out loans today will have to set aside 15 percent. In addition, graduates who pay back those 2014 (and later) loans on time each time will have their loans forgiven after 20 years under the new law, compared to 25 years for graduates struggling to pay back the loans now.

To read more about the changes made to the student loan programs, click here. Thanks to Flickr for the picture.