Trenton, NJ – This morning, President Obama signed the Health Care and Education Affordability Reconciliation Act of 2010.
The Act impacts students in a number of ways. A major component is the increase to the Pell Grant maximum award to $5,550 for 2010 through 2013. Thereafter, the maximum award would be increased using CPI as an index so that, by 2017, the maximum Pell Grant is estimated to be $5,975. Increasing the Pell Grant provides welcome relief to students who are struggling to meet the rising cost of attendance. The Act also enhances the Income Based Repayment provision for loans issued after 2014, capping federal loan repayment at 10% of the borrower’s income. As a means of funding these benefits, the Act consolidates the two federal loan programs into the one so that, after July 1, 2010, all federal Stafford and PLUS loans will be issued through the William D. Ford Direct Loan Program. Additionally, the Act will fund job education and career training initiatives through community colleges, and increase support for America’s Historically Black Colleges and Universities and minority serving-institutions.
“We are pleased that $36 billion has been invested to increase Pell Grant funding, however, we must remain vigilant to ensure that students continue to receive comprehensive customer service and assistance under the Direct Loan Program, including financial literacy and default prevention counseling,” stated Michael Angulo, Executive Director of the NJ Higher Education Student Assistance Authority. Students and their families taking out a federal Stafford or PLUS loan should not encounter any disruption as a result of the consolidation.
An immediate concern is the impact on those colleges that must now transition to the Direct Loan Program by July 1st. “Nearly 60% of the colleges in New Jersey did not participate in the Direct Loan Program,” remarked Director Angulo. “These colleges must now convert their computer systems, receive training, and implement new policies and procedures to implement Direct Lending - at a time when financial aid offices are busy packaging financial aid for the coming school year. This is all the more challenging for schools with limited personnel and resources.” He concluded that “HESAA will be proactively working with the USDE and our colleges to ensure a smooth and effective transition so that students are not adversely impacted.”
Since 1959, HESAA, a non-profit, state designated Authority, has delivered over $18 billion in financial aid. Each year, over 1 million students receive assistance from outreach programs and aid programs HESAA administers including Tuition Aid Grant (TAG), the Part-time TAG for County College Students, NJSTARS and II, the Garden State Scholars programs, the Federal Family Education Loan program, NJCLASS, and NJBEST. For additional information about HESAA please visit our website at www.hesaa.org or call our Customer Care Center at 609-584-4480.