When President Obama signed what is largely known as health care reform into law March 30, he also approved changes to the federal Direct Loan program that Hare said will save $61 billion over 10 years.
Starting July 1, all student Direct Loans will come from the federal government instead of private banks. Hare said banks have traditionally acted as third-party lenders, receiving about $9 billion a year in federal subsidies to participate.
"In contrast, this new law makes the government a direct student lender, cutting out the middle man," said Hare, D-Rock Island.
An estimated $36 billion of the savings will be invested in the Pell Grant program, Hare said, with an increase of about $61 million coming to Hare's 17th Congressional District.
The need-based federal grants will increase by $200 to $5,350 per student for the 2010-11 school year, and to $5,975 by 2017. Starting 2013, the grant amounts will go up each year on pace with the cost-of-living increases.
Cheryl Howerton, Millikin's director of financial aid, said she is eager to see the real-world implications of the reforms.
"We normally have a little bit of an increase" in Pell Grant totals, Howerton said. "What they're anticipating with this extra money is that the increases will be a little larger."
Questions Howerton posed to Hare were about which students qualify for the Pell Grant and who is considered middle class. Hare said he would have to do some research and get back to her.
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