Student Loan Legislation May Help Colleges Explain Aid
"There’s been much buzz about what the new student loan legislation means for students. It lowered interest rates and made borrowing more affordable in the short term, but how will it affect colleges and universities?" University Business reports. "...Justin Draeger, president and CEO of the National Association for Student Financial Aid Administrators, says a major benefit for institutions is that they no longer need to explain to students why federal student loan interest is out of step with market rates. 'Generally speaking, federal student loans are a safer option, but trying to explain those benefits at a time when they could get a private loan for 6 percent versus 8 percent has been very difficult,' he says. ... The new legislation means interest rates will increase only slightly above previous levels, and much less than otherwise might have occurred, says Alan Kadish, president and CEO of the New York-based Touro College and University System. But it could harm enrollment numbers. 'Despite the caps, the longer-term provisions that allow for market rate increases are concerning in that they may inhibit enrollment,' he says. But there’s no data that shows interest rates in and of themselves increase or decrease college access, says Draeger. Interest rates certainly have an impact on the cost students pay for college, but, he says, the availability of funding can impact access and choice more than interest rates could."
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