Reversal on Graduate Lending

"The GOP’s proposed update to the law governing higher education would force a U-turn for long-standing federal policies on graduate student lending," according to Inside Higher Ed

"Students who pursue graduate degrees have been allowed to take out an unlimited amount in federal student loans since Congress authorized the Grad PLUS program in 2005. But the legislation proposed last week by Representative Virginia Foxx, the North Carolina Republican who chairs the House education committee, would cap annual borrowing amounts for grad students at $28,500 annually. The bill also would change benefits for borrowers by altering income-driven repayment options and eliminating Public Service Loan Forgiveness.

Republicans said the proposed changes would put pressure on institutions to keep costs down and fits with their broader vision to simplify the federal student aid system.

...Some advocates for student aid recipients see graduate students taking it on the chin in the House bill. Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, said grad students don’t just lose access to Public Service Loan Forgiveness in the bill. They would also be shut out of the federal work-study program.

Draeger said it’s important to be clear about the specific problems lawmakers are setting out to address in the higher education bill’s reauthorization. Loan repayment rates, defaults, tuition inflation and the cost of loan forgiveness are all separate issues, he said.

Graduate students typically aren’t the ones struggling to pay back their loans, said Draeger. To the extent Congress is looking to address the moral hazard of loan forgiveness -- too many students taking out large amounts of loans with the expectation that the government would pick up much of the cost -- it could cap future loan forgiveness, rather than capping borrowing and eliminating Public Service Loan Forgiveness, he said.

'Sometimes I feel like these conversations are all going by each other,' Draeger said. 'Our take is there are ways to address all these issues. Putting caps on the loans might be one of those ways.'"

NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 12/11/2017


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