News Articles

Students Back Higher Federal School Loan Limits: Study
Dow Jones & Company, Inc. -- September 18, 2003
By Kaja Whitehouse, Dow Jones Newswire; 201-938-2243; kaja.whitehouse@dowjones.com

NEW YORK (Dow Jones)--Students support a recent proposal to Congress to increase federal student loan limits, according to a recent survey by the Coalition for Better Student Loans.

The survey was commissioned by the organization, which includes lender Sallie Mae and the American Council on Education, as part of its campaign to get legislators to revamp the federal student loan program. A proposal submitted to Congress this month calls for increasing borrowing limits on lower-cost federal loans, scrapping a 3% origination fee on these loans, and allowing students to pay interest on loans for two years before loan repayments are due. The proposal also asks that Congress limit loan consolidation for graduated students by charging a fee to consolidators. But it also asks the government to forgive more loans for graduates who enter low-paying jobs that contribute to society, such as teaching.

To support their case, the coalition commissioned a study, conducted by Philadelphia firm KRC Research, to gather student loan information from 400 college students. It found that students want an increase in the amount they and their families can borrow each year to pay for rising college expenses.

Roughly 91% of students surveyed said the maximum federal loan amount should be increased. Students would prefer a mean loan of $8,963 a year, up from the current average of $4,281 a year. The current limits are $5,500 a year for junior and senior students, and even lower for first- and second-year students. The coalition proposal requests loan increases to $30,000 over four years, up from about $17,135 today.

"It makes sense" because federal student loan limits haven't changed in more than 10 years while costs for college have been rising rapidly, said Dallas Martin, president of the National Association of Student Financial Aid Administrators and member of the coalition.

Students increasingly have been turning to more expensive private loans, said Myron L. Hanson, director of financial aid at University of Montana. "Private loan borrowing is rising at an almost alarming rate," he said, adding that such borrowing has tripled in the last few years at his university.