Limiting Loans, Preserving Access?, 3:00 - 4:00 pm

By Brittany Hackett, Communications Staff

New America on Sunday afternoon hosted a session that examined the impact that limiting loans would have on preserving access to higher education, as well as how it might help students avoid overborrowing to pay for their education.

“There’s a tremendous amount of interest in giving institutions more authority to limit loans” and a “widely held belief among financial aid administrators that students are overborrowing,” Amy Laitinen, of New America, said. A “vast majority” of schools are not meeting students’ unmet need without loans, she added

The session focused largely on the Department of Education’s loan limit experiment, in which some schools have been given the authority to restrict unsubsidized borrowing for certain, defined populations of students.

Kelly Morrissey, director of financial aid at Mount Wachusett Community College (MWCC) said that her school decided to become involved with the experiment because they found that there were many students who “were not borrowing loans to attend college, they were attending college to borrow loans.” MWCC defined their experimental population of students as those whose need for tuition, books and fees, and supplies is met in full by grant aid or subsidized loans, which are not allowed to be limited under the experiment.

The school, which is in the third year of the experiment, has so far seen a “dramatic decrease” in the amount of unsubsidized borrowing on its campus, Morrissey said, though she noted that they have not been in the experiment long enough to see its impact on its cohort default rate (CDR). She said they are hoping the loan limits will positively impact the school’s CDR and that the experiment will sway ED to give colleges the authority to limit borrowing for certain populations of students.

However, some data shows that limiting loans may be harming access, according to Debbie Cochrane, research director at The Institute for College Access & Success, Inc. (TICAS). A new report from TICAS shows that a growing number of students are attending colleges that choose not to participate in the federal student loan programs, which can negatively impact access to higher education.

The data provides “a more cautionary tale” to limiting loans for students, Cochrane said. She added that when people discuss the issue of overborrowing, it’s often in the context of students “borrowing more money than we think they should,” which is often not enough to cover college costs that go beyond tuition. Limiting loans “is a lot thornier than it seems,” Cochrane said, adding that more examination needs to be given to the issue to ensure that access to higher education is preserved.


Publication Date: 7/10/2016

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