WASHINGTON - Finalizing two major pieces of his agenda, President Barack Obama sealed his health care overhaul Tuesday and made the government the primary lender to students by cutting banks out of the process.
The new law makes a series of changes to the massive health insurance reform bill that he signed into law with even greater fanfare last week. Those fixes included removing some special deals that had angered the public and providing more money for poorer and middle-income individuals and families to help them buy health insurance.
But during an appearance at a community college in Virginia, he emphasized the overshadowed part of the bill: education.
In this final piece of health reform, Democrats added in a restructuring of the way the government handles loans affecting millions of students.
The law strips banks of their role as middlemen in federal student loans and puts the government in charge.
The president said that change would save more than $60 billion over the next 10 years, which in turn would be used to boost Pell Grants for students and reinvest in community colleges.
"I didn't stand with the banks and the financial industries in this fight - that's not why I came to Washington - and neither did any of the members of Congress who are here today," Obama said to a supportive crowd at Northern Virginia Community College. "We stood with you. We stood with America's students."
Private lenders still will make student loans that are not backed by the government, and they still will have contracts to service some federal loans. But the change reflected in the new law represents a significant loss in what has been a $70 billion business for the banking industry.
Among many other features, the new law is expected to make it easier for some college graduates to repay loans.
The government will essentially guarantee that workers in low-paying jobs will be able to reduce their payments. Current law caps monthly payments at 15 percent of these workers' incomes; the new law will lower the cap to 10 percent.
About half of undergraduates receive federal student aid and about 8.5 million students are going to college with the help of Pell Grants.
Obama was effusive in his praise for the lawmakers who stood by him on the health care and education legislation. Many of them face tough sells in their home districts over the massive health care legislation, a complex mix of crackdowns on the insurance industry, coverage expansions and insurance mandates.
He was introduced by Jill Biden, the vice president's wife, who teaches English there.
Key provisions of student loan plan
- Private banks and processors no longer would be allowed to originate loans or collect fees for acting as middlemen. Private lenders can still make student loans that are not backed by the government, and they will continue to have contracts to service some federal loans.