The legislation makes a variety of small changes to the recently signed health care law and also makes the government the issuer of all federal college loans, ending a program that paid a fee to private lenders to offer student loans.
President Obama signed into law final changes to the health care overhaul on Tuesday, calling the last legislative hurdle an "important milestone" in the road toward affordable coverage for all Americans.
But the president, who spoke at a Northern Virginia Community College campus before signing the changes, took the opportunity to highlight lesser-known student loan provisions in the new law that he said would make higher education more affordable to moderate and lower-income students.
"For a long time, our student loan system has worked for banks and financial institutions," Obama told students assembled at the Alexandria, Va., campus. "Today, we're finally making our student loan system work for students and all of our families."
The new law strips banks of their ability to issue federal student loans in favor of direct government lending. The president said the move would save the government $68 billion over 10 years. Some $40 billion in new money for Pell Grants would be also be used to dramatically increase the number of grants made and increase their individual value, the president said.
The legislation signed Tuesday was the second of two steps Democrats needed to approve the overall health care package. The new law makes a series of fixes to the one Obama approved last week, while also removing some unpopular provisions.
"It represents a major step forward," Obama told the crowd.
The legislation has a wide reach. About half of undergraduates receive federal student aid and about 8.5 million students are going to college with the help of Pell Grants. It also caps student loan repayment at 10 percent of a graduate's income when the law takes effect in 2014.
The signing of the bill concludes a bitter yearlong struggle with congressional Republicans and some inside Obama's own party who worked to halt the planned health care overhaul and block the changes to the college student loan program.
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