CHARLESTON, SC (WCSC) - The federal government will soon play a bigger role in the way some college students pay for their tuition. On Tuesday, President Obama signed new law that will change the country's student loan program.
For years the government paid banks to loan money to students, but the new law changes that. Instead of having banks act as a middleman, the federal government will handle those loans on its own.
"Our new students probably aren't going to notice a difference. I think our returning students may notice a change in their lenders," said Jenna Parish, Director of Financial Aid at Charleston Southern University.
By eliminating the banks from the student loan process, President Obama says it would save billions of dollars, which could help fund the Pell Grant program for qualified low-income college students.
Opponents of the new student loan law worry about the jobs that could be lost in the private loan sector. Other critics don't think the government should get involved.
Charleston Southern University freshman Daniel Kulhanek said, "I think it's good in the long run, but right now I can understand why people are having trouble with the short term issues."
The new law won't change loans that students have already taken out, but it will lower their monthly payments.
According to the Congressional Budget Office, student loan reform will save $62 billion over the next decade.
Most colleges and universities already do direct lending and will not be affected by the new law, including the College of Charleston and the Citadel.
The new student loan system starts July 1, 2010.