Laurie, from Richmond Virginia writes:
As a graduate student, I would like to know how cutting educational loans will strengthen the country. I realize that I am only a nurse, but I do not understand how cutting funding for the elderly and disabled and students will benefit our economy. Wouldn't cuts for special interest groups be more beneficial?
Margaret Spellings
Thank you for your question. The so-called cuts you have heard about in the news are cuts to special interests, not to students. No student will have their aid cut next year because of these very necessary reforms, and in fact more money will be made available by the Federal Government for student aid.
The Department of Education continues to work to make sure that all students in America have the opportunity to go to college. This year's budget included important reforms to the student-loan programs. These reforms included reducing unnecessary subsidies and payment to lenders, guaranty agencies, and loan consolidators. The fees a student pays when taking out a student loan will be eliminated over the next several years and students will be able to borrow more money if the need arises.
According to the state PIRGs, "Rather than cutting lender subsidies, the bill derives approximately 70% of its savings from higher loan interest rates for borrowers and redirecting excessive student and parent payments to private lenders."
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