Obama Expands Popular Student Loan Program

New law increases the maximum amount low income students may receive from the Federal Pell Grant program

The changes to the way the Federal government guarantees student loans that were signed into law by President Obama at the end of March increases the maximum amount low-income students may be awarded to $5,550 next year and nearly $6,000 by 2017. The maximum amount students were able to get under the Pell grant program was $5,400.

The Pell Grant is the most widely available grant program for undergraduate students. Not all students receive the full $5,500 amount; some will qualify for a smaller amount, depending on their (and their family's) financial situation, the cost of attending your school of choice, your enrollment status (full or part time), and whether or not the student is attending for a full academic year or just a semester.

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The reforms, which were attached to the landmark health care bill, aims to reduce the role, influence and profit of banks and make more money available for federally guaranteed student loans, which will now be issued directly by the government. The bill also aims to lessen the burden for some graduates as they pay back their loans. It also attempts to greatly simplify the student loan process and offers more financial help to lower-income students.

The reforms come at an especially good time for graduates - many of whom have opted to go into business for themselves in lieu of entering the traditional workforce. Some analysts have forecasted that the changes will make other types of loans such as small business and startup loans easier to obtain.

While a significant majority of Americans support the reforms - a CNN /Opinion Research Corporation telephone survey of 1,030 adult Americans found 64 percent of respondents approved it, while 34 percent opposed it - and student groups and Democratic lawmakers praise the changes as long-overdue, many lenders as well as Sallie Mae have opposed the bill. Opponents contend that the changes will reduce students' lending options and eliminate the jobs of thousands of private lenders, hurting the recovery of the economy.

Find out if a small business, business startup loan or personal loan of $10,000 to $250,000 can help you reach your financial goals. Click here to learn more.

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