Health care bill changes student insurance, loans

Amanda Muldoon

The final piece of health care legislation and the student loan overhaul attached to it that President Obama signed on March 23 will directly affect Villanova students in broadening health care coverage and revamping education provisions. 

The bill, the Patient Protection and Affordable Care Act, will enable students to stay on their parents’ health insurance until age 26 as well as affect changes in the method of the distribution of student loans.

 “Being able to be on your parent’s insurance until you reach 26 is a good idea because there are so many new expenses for students when they graduate, plus possible old ones like student loans to repay,” political science professor Robert Langran wrote in an e-mail. “Not having to worry right away about paying for health insurance is reassuring.”

Students being able to remain on their parents’ health insurance could also potentially have an impact on their employment decisions after graduation. In the past, finding employment along with securing health insurance may have been more vital for students upon graduation, according to Christine Palus, a professor in the political science department.

“In the current job market it is harder to find a job,” she said. “Before the new health care bill was passed, students who were not employed right away or took temporary jobs or internships were left without health insurance. The new health care bill gives students more flexibility to take risks.” 

With the new method for distributing student loans, students taking out Stafford and PLUS loans must now borrow directly from the government, through the William D. Ford Direct Loan program, rather than individual banks. 

 “There will be no change to the availability of loan funds through the Direct Stafford or Direct PLUS loan amounts,” Director of Financial Assistance Bonnie Behm said. “The main change to students will be the processing of the application. Students will no longer have to select a lender since all funds will be coming directly from the U.S. Department of Education.”

Behm explained that this will be a more efficient process, since all loans will now come from one source, and the government expects significant savings as a result. President Obama says this policy will save American taxpayers $68 billion in the coming years. 

The government plans to use this savings to issue more Pell Grants, according to Behm. Long-term benefits may arise for new borrowers. 

“Beginning on July 1, 2014, new borrowers will qualify for income-based repayment if the borrower’s standard repayment exceeds 10 percent of discretionary income, reduced from the current 15 percent, and the income-based repayment amount is lowered to 10 percent of the borrower’s discretionary income,” Behm said. “Loan forgiveness occurs after 20 years of repayment rather than the current 25.”

A possible downside to the new system, according to Behm, is that students who have already obtained loans will now have two: the Stafford and the Direct loans. In this case, it may be easiest for students to consolidate the loans so that they do not have to keep track of two separate payments, according to Behm.

It is important for students to note, Behm said, that they will need to sign a promissory note in order for their funds to be credited.  Additional information on the new process and some changes to expect will be sent out to students. Some students may notice, as a result of the new health care bill, the price of indoor tanning increase. This is due to an excise tax that was placed on the service, included in the bill. There seem to be equally strong reactions both for and against the new health care bill.

“Now I’m teaching graduate students, and their reaction seems mostly positive,” Palus said. “They do seem frustrated by the complexity of it. It is just so huge that it is hard to really understand, but they are beginning to wrap their heads around it.”