President Obama was in Virginia Tuesday to sign a new student loan bill into law.

The bill changes the lending system by making the federal government the source for all student loans.

“We stood with you. We stood with America’s students,” Obama said in his speech.

Eastern uses direct loans, which are loans directly from the federal government. In effect, little will change on campus; but at private intuitions and some universities, the system of directing loans from the government through private lenders for a fee will end. The Congressional Budget Office reports a projected savings of $62 billion over 10 years.

Of the money saved, $40 billion will be put towards higher education.

This bill will require a change in the administration of schools that use private lenders. The bill will expand Pell grants, giving $36 billion to the program in the next 10 years.

Pell grants contribute to $8.6 million students’ financial aid.

The repayment expectations of 15 percent will be reduced to 10 percent, and debt forgiveness after 25 years will be shortened to 20 years.

This bill will go into effect in 2014.

The people who will be affected are those who go to private schools or the few public universities that have private loans available. They will no longer be able to get these private loans, but will receive the same loan service from the government through the school.

Lenders like Salle Mae will no longer be giving government-backed student loans.

According to a report by The Associated Press, Salle Mae will lose close to one third of its work force to direct loans.

Salle Mae and lenders like it will still be able to service student loans and make private loans that are unsubsidized and are not backed by the government.

Schools like Southern Illinois University and Blackburn College will have to change the way the loan system works in the financial aid office.

Jan Kelsey, the financial aid director at Blackburn, said all students will be changed over from Salle Mae to government direct loans.

All of the 600 students receiving loans at the school will have to sign new promissory notes.

“Students will have the same Stafford Loan anyway, the same rate. It will not impact students as much except they will be paying the federal government instead of the banks,” Kelsey said.

The financial aid office at Blackburn has been anticipating the change, and Kelsey has been attending training and Web seminars on how to handle the loans.

“We’ve been indirect for the 20 years I’ve been here, we have the Federal Family Education Loan program and 60 percent of colleges do it, this is a big undertaking by the government,” said Kelsey. “The government promises they can handle it.”

The bill was originally introduced to the house passed, and then failed in the senate.

It was included in the health care bill as an attachment so it would not be voted on as a separate measure, and be carried into law with the larger health care reform bill.

“They should have tried a vote instead of the health care bill. We need an overall vote to say ‘yah’ or ‘nay’ to see what the country thinks of it,” Kelsey said.

The Associated Press contributed to this report.

James Roedl can be reached at 581-7942 or [email protected].