News Articles

Students overestimate federal loan amounts, according to survey
By Tracy Adams, University of Memphis Daily Helmsman
tracadams@msn.com

September 24, 2003

Many University of Memphis students depend heavily on student loans to pay tuition and buy books, and they are among a growing number of American students who overestimate the amount of money the federal government will dole out to them each academic year.

At least those are the findings of a new survey released last week by the Coalition for Better Student Loans, a group of financial aid administrators, parents, loan providers and organizations representing more than 2,000 colleges and universities.

The coalition surveyed 400 college students by telephone asking a variety of questions about student financial aid and what changes, if any, students would like to see in the federal program, said Tony Pals, National Association of Independent Colleges and Universities director of pubic information. Pals serves on the board of the Coalition for Better Student Loans and helped organize the survey questions.

"The results of our survey indicate clearly that students want (loan) limits increased," Pals said.

"Many of the students surveyed said they were fearful they will have to resort to other less favorable options to fund their college education."

About 91 percent of the students surveyed said they supported increases in federal student loan limits. However, more than half thought the maximum amount a student could take out per academic year exceeded $10,000, Pals said.

While Pals admits many students are misinformed about the rules regulating loan limits, he said there still remains a chasm between how much a college education costs and what students, and their families, can afford to pay.

University of Memphis director of financial aid, Richard Ritzman agrees students loan limits should be increased.

"These limits (currently in place) are the limits that were in effect 20 years ago," Ritzman said. "The cost of education has gone up significantly since then. Loan limits should take into account the realities of today and the cost of a college education today."

That's exactly what lawmakers are doing. This year the Higher Education Act, which governs how federal financial aid is funded is up for reauthorization. In short lawmakers are considering either changing the federal financial aid program or leaving it as is. This reauthorization process is what sparked the Coalition to conduct the financial aid survey, Pals said.

After completing the survey, Pals said, the Coalition sent a list of recommendations to lawmakers in hopes of influencing the reauthorization process, and combating arguments from some on Capital Hill that increasing loan limits will create more national debt.

"The bottom line is that the amount of money it will take to increase loan limits would have a minimal impact on the national debt," Pals said.

The bottom line for Ritzman, who has spent 18 years working with the federal financial aid program and the students it benefits, is that many students won't be able to attend college without some type of financial aid.

"Financial aid is an investment in the student," he said. "There's no better investment a student can make."