This year President Barack Obama appeared at Northern Virginia Community College to sign a major section of what most people have been calling his health care reform bill. But this section had absolutely nothing to do with insurance or any other aspect of health care. On the other hand, it has a lot to do with helping students get educational scholarships and grants in the very immediate future.

If anyone paid attention, the actual title of the bill Obama signed was “The Health Care and Education Reconciliation Act”. The second half of that title was grossly ignored by most media pundits, but if it goes through as planned it will have an incredibly positive impact on the future of education as a whole, including online colleges.

It should be noted this new bill addressed the education system from the ground up, so major parts of it concern elementary and secondary education. At the same time, it’s hard to deny the nation’s education system is in need of a considerable reconstruction, from the ground up. Students who graduate high school but aren’t able to read aren’t going to make the best college students after all.

What will have the most impact on the college level begins with grants online reform. When they were first initiated by then President Lyndon Johnson in 1965, the loan money came directly from the government, which also handled all the administration aspects of the program.

After a time, though, it was felt costs could be saved if the money was administered through banks. Over time, the banks felt they could charge higher rates than was initially planned. As the interest rates escalated, so did the number of loans that began to default. This was then coupled with the present day recession, and the government began to really lose money.

By cutting out the banking middlemen, again returning the student loan system to the federal government, President Obama expects there will less defaults due to lowered interest rates. In addition, the profits generated from these loans can be plowed back into increasing the Pell grant and related financial aid programs. The Pell might actually jump from a $5,350 to a $6,000 ceiling in about one year.

That isn’t all the President will do with the savings, either. He announced a portion of money saved will go to online and community colleges. This is because these schools simply cost as much as 60% less than the bigger universities. If the community college has an online division, that’s even better. All the school has to prove is it is an accredited Title IV institution.

“For a long time, our student loan system has worked for banks and financial institutions,” Obama said that day. “Today, we’re finally making our student loan system work for students and our families…we can rightly say the foundation on which America’s future will be built is stronger than it was one year ago.”

If you were to ask the general public what was the actual title of the bill Obama signed, don’t be surprised if you get a blank stare. It’s actually called “The Health Care and Education Reconciliation Act”. Most media pundits grossly ignored the second half of that title. What’s important is if it goes as planned it could have a very big impact on education, including online colleges.

It should be noted this new bill addressed the education system from the ground up, so major parts of it concern elementary and secondary education. At the same time, it’s hard to deny the nation’s education system is in need of a considerable reconstruction, from the ground up. Students who graduate high school but aren’t able to read aren’t going to make the best college students after all.

What will have the most impact on the college level begins with college grant reform. When they were first initiated by then President Lyndon Johnson in 1965, the loan money came directly from the government, which also handled all the administration aspects of the program.

As time progressed and the administrations changed, it was decided it would save the government money if the administrative aspects were handled by banks. That turned out to not be the case when the banks started charging higher interest rates than the history of the entire program, as much as 19%. In the end more loans defaulted than ever before. Couple this with the current economic recession and the student loan program was hemorrhaging tax payer dollars.

This new legislation returns all administration back to the government. Obama expects less defaults due to lowered interest rates, and the money the government will generate from these loans can be plowed back into Pell Grant and related grants and scholarships. If all goes according to plan the Pell will go from a ceiling of $5,350 to $6,000 by 2011. Obviously, one of the people who will be keeping an eye on all this is the college financial officer, who should be consulted on this.

Another aspect of this program is targeting a large portion of money towards community and online colleges. The reasoning for this is that these forms of schooling simply cost considerably less than the bigger schools and have smaller war chests than the Harvard’s and MIT’s of the world. If the community college has an online division, that’s even better. What really matters is the school is an accredited Title IV institution.

“For a long time, our student loan system has worked for banks and financial institutions,” Obama said that day. “Today, we’re finally making our student loan system work for students and our families…we can rightly say the foundation on which America’s future will be built is stronger than it was one year ago.

As the rules for lending, scholarships and college grants are changing, all avenues should be explored. Find out what is available with online college grants and see if corporate sponsorship, private grants, or other means are compatible with your needs. Don’t overlook Pell grants, a backbone of financial aid for those who qualify.