CINCINNATI, OH (FOX19) - The Trump administration proposed new limits on federal student loans taken out by parents and graduate students as part of a broader proposal to curb the cost of college.
White House officials included the plan in a list of suggested changes to the Higher Education Act, a sweeping federal law that governs student lending.
The legislation is getting its first overhaul from Congress in more than a decade.
A primary goal of the proposal is to curb the growth of college tuition rates and reduce the nation’s student loan load, which has reached nearly $1.5 trillion and has more than tripled since 2003, according to the Associated Press.
University of Cincinnati Economics Professor, Dr. David Brasington says the proposal could push more people who want to go to college to take out private loans, which typically have a higher interest rate.
“It could encourage students to choose a cheaper college instead of one that’s an ideal choice. For some families who can’t save and can’t afford to go to the private market, they might not attend college at all,” he said.
In the long run, Brasington suggests it could impact our nation’s workforce with people possibly not going to college.
Some Democrats running for president in the 2020 election like Vermont Senator Bernie Sanders have campaigned for free college.
When asked about his thoughts on how that would impact the U.S. economy, Brasington said, “It’s hard for me to think of a scenario where that would hurt our economy. Probably on that, it would be a net benefit but it would also raise tuition but it would get more students into college who couldn’t afford and increase the skills of the labor force, increase labor productivity and better the economy.”
The proposed solution is to cap federal loan programs available to parents and to graduate students.
The plan does not propose specific limits, but officials suggested it could vary based on academic program.
Underpinning that idea is the belief that colleges are largely responsible for the nation’s debt woes. The White House says easy access to federal aid has led colleges to drive up prices, adding that they are “unable or willing” to make education more affordable.
Colleges often argue they have been forced to raise tuition to make up for reduced funding from their states.
Some Democrats have echoed that position, calling for greater government support for schools.
Several items on the White House's wish list were also included in the Education Department's budget proposal for next year, including the elimination of public service loan forgiveness, a program that can erase debt for certain borrowers are 120 months of repayment.
Instead, the White House says all federal borrowers should get undergraduate debt wiped clean after 180 months of repayment. Education Secretary Betsy Devos praised the plan.
Congress is in the early stages of reauthorizing the Higher Education Act. The law, originally signed in 1965, received its last major update in 2008.