Higher Ed Utah

For more than four decades, students have borrowed money from Uncle Sam to pay for college. That tradition continues this year, but with a twist: Starting July 1, all students who take out federal student loans will borrow directly from the federal government, instead of through a private lender.

The change, included in the health care overhaul bill that cleared Congress last week, has caused considerable turmoil in the banking industry, which stands to lose billions of dollars in federal subsidies. But for borrowers, the change will be much less drastic. Interest rates for federal student loans won’t change, nor will the limits on how much you can borrow. And Uncle Sam is no pushover: If you fail to repay your loans after you graduate, you’ll still face stiff penalties.

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