"Congress is expected to reauthorize the federal law governing higher education this year, which would most likely overhaul the federal student loan and work-study programs," according to U.S. News & World Report.
"The Higher Education Act of 1965, which is overdue for an update, is the primary law that authorizes federal student aid programs. Last month, GOP members introduced a House bill, known as the PROSPER Act. While some of the provisions introduced in the House bill are unlikely to make it to the Senate floor, experts say there's movement to change postsecondary education regulations with the HEA reauthorization.
...Under the proposed ONE loan program, undergraduates would be able to borrow more and graduates would borrow less.
The new lifetime loan limit for dependent college students would increase to $39,000 – nearly $8,000 more than the current cap. Graduate and professional students would be capped at $150,000 total, while the new lifetime limit for medical students would be $235,500 – roughly a 5 percent increase compared with the current amount.
Jason Delisle, a resident fellow from the American Enterprise Institute, says it's likely that increasing the undergraduate cap will go through with the HEA reauthorization, since the undergraduate borrowing limit hasn't increased since 2008.
'With increasing the undergraduate student loan limits – those additional loans could really be used for students living expenses,' says Colleen Campbell, the associate director for postsecondary education at Center for American Progress. But she notes, 'The challenge that we end up seeing is we're increasing loan limits so much and we're increasing Pell just a little bit.'
But with the ONE loan program, the government would eliminate charging an origination fee. For example, the origination fee on the undergraduate Stafford loan is slightly more than 1 percent. And PLUS loans have a 4.26 percent fee, which adds nearly 1 percentage point to the annual interest rate.
Origination fees cost the average undergraduate a total of $235 and the average graduate student $1,145, according to the National Association of Student Financial Aid Administrators. In most cases, students owe interest on those origination fees when they enter repayment."
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: 1/11/2018