The administration proposes capping the amount of federal student loans that parents and graduate students can borrow, citing a 2017 report from the Federal Reserve Bank of New York that argues expansion of federal student aid leads to an increase in college tuition prices. Progressives have contested this theory in the past, arguing that tuition prices rise even when federal aid does not, and that tuition increases are more closely correlated to cuts to state education funding.
The proposal did not specify at what level federal loans would be capped.
Currently, dependent undergraduate students are able to borrow up to $31,000, and independent undergraduate students can borrow up to $57,500, through the PLUS Loans program. There is currently no limit to the amount of federal student loans graduate students and parents can take on.
"If we're putting limits on undergraduate students," says Baum, "why would we not put limits on graduate students and parents also in a way that would give them access to funds but would not allow them to over borrow?"
Some fear that limiting access to credit in these ways will disproportionately impact middle- and lower-class Americans, who rely on federally-subsidized loans to earn their advanced degrees. Others say the proposal does little to address the true causes of the higher education affordability crisis.
"The White House's proposal is a feeble attempt to claim the Trump Administration is helping students by identifying one symptom of rising student debt, while completely ignoring the root cause — that college costs are rising exponentially and most students can't afford college without taking on massive amounts of debt," says Senator Patty Murray, ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, in a statement. "In fact, this proposal would end up hurting students by reducing the amount of federal aid for students and taking billions out of the pockets of borrowers."
James Kvaal, president of The Institute for College Access & Success, also took issue with the proposed loan cap, and rejected the claim that the availability of loans is driving rising college costs. "The solution is to invest more in Pell scholarships for low-income students, [and] to work with states to make public colleges and universities more affordable," Kvaal tells the Associate Press.
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