Frequently Asked Questions

What is the Coalition for Better Student Loans?

The Coalition for Better Student Loans is a group of financial aid administrators, parents, schools and loan providers who are working together to increase access to higher education by bolstering the federal student loan program.

The group is comprised of: American Council on Education (ACE), Association of American Universities (AAU), College Parents of America (CPA), Consumer Bankers Association (CBA), Education Finance Council (EFC), National Association of Independent Colleges and Universities (NAICU), National Association of State Universities and Land-Grant Colleges (NASULGC), National Association of Student Financial Aid Administrators (NASFAA), National Council of Higher Education Loan Programs (NCHELP), and Sallie Mae.

Why does the Coalition believe the federal student loan program needs improvement?

Student loans are the single most important source of college financial aid -- making completion of a Bachelor's degree possible for nearly 61 percent of students. The Coalition believes Congress can improve the federal student loan program by providing (1) maximum benefits to students while they are attending school, and (2) targeted help to borrowers facing financial difficulty once they have left school will improve access to higher education.

What are the Coalition's proposals?

The Coalition is proposing a five-part plan to improve college access and ensure that every student who wants to attend college has the financial resources they need, regardless of their personal financial circumstances. The Coalition is urging lawmakers to enact these proposals as part of the reauthorization of the Higher Education Act.

The Coalition's recommendations are:

1.	Increasing Stafford loan limits
2.	Provide origination fee relief
3.	Providing more flexible repayment options
4.	Maintaining a viable loan consolidation program
5.	Extending loan forgiveness to those working in certain highly needed occupations

How does the Coalition expect lawmakers to fund these proposals?

We recognize that some of these proposals will cost money. We look forward to working with lawmakers to determine the priorities within the Higher Education Act.

Why is the Coalition recommending changes to the federal student loan program? Aren't student grants more important?

Members of the Coalition unanimously believe that students are best served by increased grant aid. In an ideal world, we could simply provide the necessary funds to students to bridge financial gaps they might face. But with federal and state budget deficits, we realize that student loans will continue to provide a substantial share of the federal financial aid available for low- and middle-income students.

In fact, student loans are the single most important source of college financial aid. With their below-market interest rates, federal loans offer students the opportunity to invest in themselves regardless of their credit history. Compared to interest rates on unsecured consumer credit, the value of federal student loans to a student who has no credit history, no co-signer and no chance for a private loan can be "priceless".

How much do students borrow in federal student loans?

During FY 2002, approximately 10 million loans worth $40 billion in new federal student loans were made to eligible students and their families.

What percentage of undergraduates are currently at their loan limits?

Won't higher loan limits simply increase the debt burden students carry after graduation?

Today's borrowing limits on federal student loans have not changed since 1992 and freshman loan limits have been essentially unchanged since 1972. As a result of these limits, students are increasingly forced to take other measures to fund their education, including working longer hours and taking out other types of loans that offer less favorable terms and interest rates.

Increasing federal student loan limits would allow students to borrow for their education under the most favorable terms. To minimize unnecessary borrowing, the Coalition also recommends giving schools the flexibility to set lower loan limits for entire groups of students -- for example, all first-year students, or all students at a lower cost school -- as they deem appropriate. We are also proposing more flexible repayment schedules to all graduates and extending loan forgiveness to those in certain occupations.

Student loans are remarkably cost effective for taxpayers. Representing only 1/10th of 1 percent of the entire federal budget, student loans cost taxpayers less than one penny for every dollar of outstanding loan.

The Coalition's proposals seem to favor current students over recent graduates. How does the Coalition propose helping graduates who often leave school burdened with debt?

In addition to providing maximum benefits to students, the Coalition recommends targeted help to borrowers facing financial difficulty once they have left school. This help includes offering greater initial repayment flexibility to all borrowers including an interest-only plan, a partial interest plan and extended borrower repayment.

The Coalition also proposes that Congress provide $1 billion in funds for loan forgiveness programs to assist borrowers who enter lower paying, high-need career fields such as teaching in low-income areas.