House Piggybacks New Student Loan Program on Healthcare Reform Package: Pell Grant Program for Low-Income Students Gets an Additional $36 Billion

In conjunction with the passage of major healthcare reform, the House of Representatives passed legislation revamping the federal student loan program. Under the bill the Federal Family Education Loan program would be eliminated. This program provides federally guaranteed loans through private financial institutions. Under the new program, loans would be made to students directly by the federal government. By cutting out the middle man, the program is projected to save $61 billion over the next decade.

The legislation provides that $36 billion of the savings be directed to shore up the Pell Grant program, which provides grant money for college to millions of low-income students. The maximum Pell Grant award would increase to $5,900 over the next decade. Currently the maximum grant is $5,500.