The move is expected to save the government more than $60 billion, of which more than $30 billion will be funneled to the Pell Grant program. About 317,600 Michigan students receive Pell Grants, and more than 7,000 MSU students received them during the 2007-08 school year.

The bill also would forgive a student’s loan repayment after 20 years, down from the current 25 years.
The student loan bill now moves to the Senate for a vote and then will move on to President Barack Obama for his signature.

The student loan overhaul bill must be reconciled by the Senate because it was attached to the health care bill Thursday and has not been seen by the Senate.

Val Meyers, associate director of financial aid at MSU, said except for the changes to Pell Grant amounts, MSU won’t be significantly affected by the bill because it already utilizes the program now mandated for all colleges and universities.

Under the Direct Loan Program, the education department gives all loan money to colleges and universities.

“It’s not going to be any change for our students as far as their lending is concerned,” Meyers said.

Meyers said the maximum amount students will be able to receive under the program will be $5,500, starting in the fall. The maximum amount would increase yearly until 2019 by the rate of inflation.

Ben Galicki, an international relations junior who said he received $1,500 in Pell Grants each of the past two semesters, said the loans are important in funding his education because of his economic status.

“It is a decent part of my tuition paid for by this,” Galicki said.

“(Pell Grants go) toward students in need who will need to find other, more challenging ways to fund their education.”

Meyers said the loan reform bill is expected to save the government money because it will reduce the costs of guaranteeing federal loans distributed by private lenders, such as banks.

When banks and other lending institutions use their own funds to loan students money, they are distributed under terms dictated by the government. The government then guarantees banks a return on those loans. In the event a student defaults on their loan payment, the lender can sell the loan to the government to get their money back, Meyers said.

Gregory Cendana, president of the nonpartisan United States Student Association, or USSA, said the provisions included in the bill are needed to better higher education across the nation.

The USSA lobbies Congress on higher education issues, such as tuition.

“The savings … can be used to continue increased funding to benefit higher education programs,” Cendana said.