If you are counting on the federal student loan program, it is essential for you to aware of a few changes that are taking place with the program. One of the biggest potential changes to hit the federal loan program may come from a bill that was recently introduced by Representative George Miller, who is a Democrat in California and is the chairman of the House Education and Labor Committee.

According to Miller’s plan, the current Federal Family Education Loan Program, which involves the government subsidizing private lenders who make federal loans, would see some significant changes. In fact, if the bill goes through, students would actually borrow directly from the U.S. Treasury as early as July of next year.

The nonpartisan Congressional Budget Office estimate that this change would help the government save about $87 billion over the next 10 years. With Miller’s bill, $10 billion of these dollars would be used over the next 10 years to create a competitive-grant program to help improve early childhood programs for children from birth to five years of age.

In order for states to qualify for these grants, they would have to meet certain criteria. These include:

· Reworking of early learning standards
· Improving program review and monitoring procedures
· Providing comprehensive professional development programs
· Providing screening for children’s health, disability and mental health needs
· Improving support provided to parents
· Improving procedures used to assess children for school readiness

The bill calls for the U.S. Department of Education to administer the program in collaboration with the Department of Health and Human Services, which is currently in charge of operating the Head Start program.

Although the House Appropriations subcommittee that is responsible for dealing with educational spending had previously rejected a $500 million early childhood education proposal that was included in the 2010 fiscal budget, Miller’s bill does seem to have a good amount of support. In fact, U.S. Secretary of Education Arne Duncun has already stated that he supports the bill, stating that “It’s better to invest money in education rather than subsidizing banks.”

In addition to helping to fund early childhood education programs, the proposed bill would also provide about $40 billion toward Pell Grants, which are used to help low-income students pay for their college expenses. Under the proposed bill, Pell Grants would be indexed to the Consumer Price Index, plus 1% as President Obama had previously suggested in his budget. If this change is made, the maximum Pell Grant award would go up from $5,550 in 2010 to $6,900 in 2019. The bill differs from Obama’s plan, however, in that it does not include making the Pell Grant program mandatory.

The new bill proposal is a “good compromise” according to Duncan, who went on to say that “This is absolutely the right outcome for students This puts us on the path where we need to go.”
Not everyone is in agreement with Duncun, however, as Representative Kline from Minnesota, who is also a top Republican within the House education committee, has expressed concern about the bill shifting away from the private sector to the “cold, federal bureaucracy.”

The bill also calls for spending $10 billion of the savings to provide community colleges with additional resources and to improve online course offerings. This would be accomplished by providing grants of $1 million or more to community colleges that want to revamp their remedial programs, improve their adult education programs and increase their dual enrollment offerings.

President Obama has been quite open about the import role community colleges will play in the country’s economic recovery. In fact, he recently nominated Martha J. Kanter, who is a former community college official, to serve as his undersecretary of education.

Another aspect of the proposed bill is to add $2.5 billion to the College Access and Completion Fund, which would focus on helping to improve graduation rates. This is also in line with President Obama’s goals, as he had previously told Congress that he wants the United States to have the world’s highest college graduation rate by 2020.

Of course, student lenders are not on board with the changes, but neither are some members of Congress who are worried about expanding the role of the federal government. In addition, some college officials have expressed concern about switching to a direct-loan program within such a short period of time. Still, it will be interesting to see how things pan out and how the face of federal student loans may change over the next year or so.