Assessing the REAL Reforms Act: Loan Limits

“'Assessing the REAL Reforms Act' is a Minding the Campus symposium that will closely analyze the Responsible Education Assistance through Loan (REAL) Reforms Act, a bill recently introduced by Representatives Virginia Foxx (R-NC), Elise Stefanik, R-NY, and Jim Banks (R-IN)," Minding the Campus reports.

..."Section 212 also takes the important step of allowing universities to cap student borrowing. Currently, colleges are barred (apart from on a case-by-case basis) from assessing a student’s likelihood of repaying a loan and capping the amount he can borrow. Yet, giving colleges the ability to limit student borrowing—even if few colleges choose to do so—could help reduce student debt. CBO has found that borrowers tend to increase borrowing “in step with increases” in loan limits. As the National Association of Student Financial Aid Administrators has explained, schools should be able to help students borrow responsibly, ensuring they avoid delinquency and default, by being allowed to set loan limits below the federal cap and by restricting lending through school-determined criteria, such as enrollment status and chosen major. This would also help universities maintain low cohort default rates."

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Publication Date: 10/4/2022

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