Last month, President Obama’s health-care reform was signed into law. In Washington, D.C., Democrats received threats and Republicans lamented, but on the West Coast, Washington students rejoiced — well, many of them did.
The health-care bill grants coverage to 32 million uninsured Americans and is designed to end unpopular insurance-company practices such as refusing coverage to those with pre-existing medical conditions. But two provisions in the bill specifically target students.
The first gives relief to students struggling to find jobs in the current economy by allowing them to stay on their parents’ insurance plans until they are 26 years old rather than 22. Evelyn Hodge, a fiscal specialist in the University of Washington’s Student Life, said it is still unknown how the reforms will affect the student insurance plans the university offers.
UW junior Marie-Anne Johnson was diagnosed with thyroid cancer last year and said the age extension will enable her to continue medical treatment while she finishes her degree.
“I’m really happy about it because I have cancer, I need insurance and I won’t be able to afford it right away when I graduate,” she said. “I’m going to graduate school, and I was going to go anyway, but this just makes it a lot easier. It gives me peace of mind.”
UW student Chris Lott also thinks the change will bring relief. "For those graduating who are in debt after college, this will allow them to eliminate some financial stress," he said. "For others it could be an escape route to kicking it in their parents' basement for another four years."
But students whose parents are uninsured won’t have it so easy. The new bill requires people who are uninsured to buy coverage plans in order to help compensate insurance companies for their increased coverage requirements. Students who don’t buy plans will face fines starting at $95 and slowly increasing to $695 or 2 percent of their yearly income, whichever is greater.
Justin Bryant, a member of the UW’s College Republicans, thinks this change is unfair.
“[It] hurts individuals that are younger the hardest,” he said. “Many people in their 20s don't need or don't want an expensive health-care plan when they go to the doctor once a year.”
But Teodora Popescu, a UW Young Democrat, doesn’t see it causing too much harm. She pointed out that some students will have the option of purchasing a “catastrophic” plan with lower premiums.
Additionally, she added, “low-income and uninsured Americans, including students, will be able to purchase insurance through a state-run insurance exchange. Those from 133 percent of the poverty level to 400 percent of the poverty level will be eligible for subsidies from the government, making insurance cheaper.”
The second provision found in the Student Aid and Fiscal Responsibility Act (SAFRA), an amendment to the Health Care and Education Reconciliation Act of 2010, will change the application process for private student loans.
Under the current system, students can apply for loans, through banks and other private lenders, that are subsidized by the federal government. Under the new system, students will apply directly to the government for private loans, cutting out the middlemen (banks) and saving taxpayers $61 billion over 10 years from the eliminated subsidies, according to the Congressional Budget Office. In addition, the new Direct Loan program will help reduce the national deficit by at least $10 billion over 10 years, experts say.
Despite the savings, Bryant thinks the Direct Loan program is a step in the wrong direction.
“Now any student who needs a college loan must hope and pray their parents fit in the right income bracket just to qualify for a loan from the federal government,” he said. “Those who don't qualify for what the federal government deems worthy of a student loan will be left on the street with nowhere else to turn for student loans they can afford.” But Kay Lewis, the director of the UW’s financial-aid programs, said that is wrong. The University of Washington has had a direct-loan program since the early '90s, and therefore its students won’t be greatly affected by the switch, she said. As for students at other universities, Lewis thinks they’ll be better off.
"Students will get those loans through the government like our students have been doing," she said. "Lenders can still offer, and some of them will still offer, private educational loans. Those were never funded by the government and they’re not affected by this program.”
Lewis also pointed out that the new bill focuses on income-based loan repayment and lowers payments from a monthly cap of 15 percent to 10 percent. Furthermore, if students keep up with their payments, remaining debt will be forgiven after 20 years instead of 25, and students who enter public service will have their debt forgiven after only 10.
“This itself will do two important things for low-income and loan heavy students,” Popescu said. “One, significantly cut the amount of college debt, which could influence students' decisions to attend grad school, med school, etc. Two, alter where students consider taking jobs, incentivizing public-service jobs.”
Lastly, according to the Congressional Committee on Education and Labor, the savings from SAFRA will go back into student financial aid programs. Pell Grant scholarships, which 25 percent of UW students receive, will increase from $5,550 in 2010 to $5,975 by 2017. Additionally, in three years the scholarship will be linked to the Consumer Price Index and will reflect the rising cost of living.
Lewis said this will provide a more stable source of funding for students.
“[The bill] will be positive for Pell Grants,” she concluded, “and I think students who are at schools that did not go through a direct loan program will find an easier, smoother way to get loans.”
Like what you just read? Support high quality local journalism. Become a member of Crosscut today!