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In future, those who borrow government loans can repay them with ease and the needy college students will have easy access to loan programs such as Pell Grants. This will be ensured with President Obama’s overhauling of the higher education aid.

Private commercial banks will be out of the Federal student loan market. This will result in a situation where these institutions will no longer be able to make billions of dollars in profits. The college financial aid office will now be in-charge of disbursing loans to students who no longer need to run to private banks.

This essentially means, no more banks acting as middlemen and charging fees in the student loan process. The savings thus accumulated by the government will be used to enhance the Pell Grants. Certain workers will now find it extremely easier to repay student loans. Borrowers are also all set to enjoy higher rates of approval and lower rates of interest on their loans.

Since the year 1965, when loan programs that are bank based began, commercial banks such as Nelnet and Sallie Mae have enjoyed Federal subsidies for loaning money to students, that too with all the risks assumed by the banks.

This program has always been opposed by the Democrats who felt that the taxpayers and students money went just to profit the banks. When the student loan revamping program bill was included in the House, it was not voted for by any Republican. Overall, this legislation has a huge reach as Pell Grant currently benefits at least 8.5 million students.

Opposition to the revamping of student loan industry was evident with some who claimed that the government was over reaching with the overhaul and is try to kill bank jobs. Over the next ten years, $36 billion will be disbursed through Pell Grants which will be an expanded direct lending program for low income families.

The bill was praised by Iowa’s Sen. Tom Harkin who said it was definitely a huge victory for middle class deserving students. He said that kids will be able to afford college and will not be burdened with heavy debt as they graduate. With the help of this bill, over the next ten years, $61 will be saved.

According to Mark Kantrowitz, an analyst and the website FinAid.org publisher, though there will be an increase in the Pell Grant with this saving, it is not really substantial enough to keep pace with the rising costs of tuition.

There was a stiff opposition and fierce fight till the end by the banks that forced some of the lawmakers including one from Nebraska Sen. Bel Nelson to vote against the overall bill where the loan issue was clubbed with the health care package.

Now, more number of eligible students will enjoy Pell Grants. This will especially benefit students with monthly family income below $20,000. Eligibility will also be extended to students with monthly income of up to $50,000. Paying student loans will become easier as the income share that graduates have to allocate to loan payments will be reduced.