can somebody tell me what's going on with this news article or maybe summarize it? please?

Question

House and Senate negotiators reached a compromise late Wednesday on a bill that makes sweeping changes to the federal government's college financial aid programs.

The bill cuts the interest rate students pay on subsidized Stafford loans by half over four years and increases the maximum Pell grant for needy students.

Under a new program, starting in 2009 borrowers won't have to devote more than 15 percent of their discretionary income to student-loan repayments, although any unpaid amounts will be added to the loan balance in most cases.

The bill also establishes a tuition-assistance program for students who commit to teaching high-need subjects in low-income public schools and a loan-forgiveness program for other public-sector workers.

Congress intends to pay for these and other programs by cutting the subsidies it pays to private-sector lenders who make federally guaranteed Stafford and Plus loans by $20.9 billion over five years.

Lenders have said these cutbacks will force them to curb benefits they have been offering, such as waiving or discounting origination fees and reducing interest rates for borrowers who make on-time payments for three or four years. Very few borrowers qualify for the interest-rate cuts and they're not offered to students at all schools.

The bill, HR2669, incorporates provisions of bills passed earlier by the House and Senate and has been renamed the College Cost Reduction and Access Act. The compromise bill now goes back to the House and Senate for approval and then to President Bush. While Bush has endorsed most aspects of the bill, his administration has opposed certain provisions, such as reducing Stafford loan rates.

Here's a closer look at some provisions of the bill, sponsored by Rep. George Miller, D-Martinez, and Sen. Edward Kennedy, D-Mass.:

Stafford loan rates: The bill would reduce the interest rate on subsidized Stafford loans by half over four years. Subsidized loans go to students who demonstrate financial need.

The rate cut would be phased in starting July 1. It would go from 6.8 percent today to 3.4 percent by 2011. In 2012, it would jump back to 6.8 percent unless Congress intervenes.

The rate cut only applies only to new subsidized Stafford loans, not ones that students have already taken out. It does not apply to unsubsidized Stafford loans, which students can take out regardless of financial need.

Income-based repayment: Starting July 1, 2009, borrowers would not have to devote more than 15 percent of their discretionary income to repaying Stafford student loans. This applies to both subsidized and unsubsidized Stafford loans, regardless of when the loans were taken out.

If a borrower is making reduced payments on a subsidized loan, the government will pay the unpaid amount for up to three years. After that, the unpaid amount will be added to the loan balance.

For unsubsidized loans, all unpaid amounts will be added to the balance.

After 25 years, all borrowers who are in this income-based repayment program will have any remaining balances forgiven.

The new program means "you don't have to hold back from taking a job teaching or being an entrepreneur" because you can't repay your loans, says Robert Shireman, executive director of the Project on Student Debt.

Pell grants: The bill would increase the maximum Pell grant, which generally goes to families making less than $40,000 or $50,000 per year. The maximum Pell grant would increase by $1,090 over the next five years, reaching $5,400 by 2012. Unlike loans, Pell grants do not have to be repaid.

Teacher tuition assistance: Undergraduate and graduate students who commit to teaching certain subjects, such as science and math, in low-income public schools for at least four years can receive up to $4,000 per year - for a total of $16,000 - in tuition assistance. Students must maintain at least a 3.25 grade point average to be eligible for this program, which would start next year. If students don't fulfill the teaching obligation, the assistance becomes a loan they must repay, according to Miller's office.

Loan forgiveness: Borrowers who work in other public-sector jobs such as the military, law enforcement, firefighting, nursing, public defenders, librarians and early childhood teachers can have any balance on their student loans forgiven after 10 years of service and loan repayment. To take advantage of this program, borrowers must have direct student loans or consolidate their loans under the government's direct-loan program. This program begins July 1.

Plus loan auction: In a controversial move that marks a big departure from current practice, starting in 2009 the government would auction the right to provide government-guaranteed Plus loans to parents. In each state, the two lenders that offer the best deal to the government would provide all parent Plus loans in that state.

Today, all qualified lenders can offer Plus loans and parents can choose any lender they wish. This change would not affect the interest rate parents pay on Plus loans, but it would limit their selection.

The auction process would not apply to Stafford loans nor to Plus loans offered to graduate students.

Net Worth runs Tuesdays, Thursdays and Sundays. E-mail Kathleen Pender at [e-mail].

This article appeared on page C - 1 of the San Francisco Chronicle

Answer 1

These are the same goons that write our tax laws.
I can't explain either.

Praytell, what is descretionary income, of which 15% is mandatory payback?
How many individuals even know the meaning of "descretionary"?
It really means any left over income after "only necesseties of life are paid". Think about that.

This will garner votes in any event. It sounds good for 2008.

Answer 2

It means that student loans are going to be cheaper and that those in low income households have a better chance at getting a student loan they can afford.

Answer 3

I told my teacher to f*ck off when she said that. 3 day in school suspension.