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US ending the subsidized student loan

oscar2345oscar2345 2 replies5 threads New Member
Can the government really end the subsidized student loan in 2020? And what will happen to the college loans from the institute?
edited August 2019
56 replies
Post edited by MaineLonghorn on
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Replies to: US ending the subsidized student loan

  • thumper1thumper1 76517 replies3384 threads Senior Member
    What college loans from institutions? There are a few colleges that do have loans of their own for students, but not very many.

    @oscar2345 are you in college? Are you an undergrad? Some of your other threads are about medical school and professional school financial aid.

    Subsidized loans for grad and professional school students don’t exist at all.
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  • bluebayoubluebayou 27094 replies176 threads Senior Member
    edited September 2019
    Can the government really end the subsidized student loan in 2020?

    No.

    Earlier this past spring, the Administration proposed changes to the Higher Ed act which Congress can adopt, change, or ignore. In other words, Congress could 'end' the subsidized student loan program with the President's signature, but the President cannot end it unilaterally.
    edited September 2019
    Post edited by mom2collegekids on
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  • oscar2345oscar2345 2 replies5 threads New Member
    No man I’m in 12th grade preparing to go to college that is why I’m asking all these financial aid questions I don’t know how the process works.
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  • oscar2345oscar2345 2 replies5 threads New Member
    Sorry I meant to post that to thumper1
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  • mom2collegekidsmom2collegekids 84272 replies1046 threadsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    I never saw a proposal to end subsidized loans. I saw a proposal to cap the amounts that students and parents could borrow.
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  • cshell2cshell2 894 replies10 threads Member
    edited September 2019
    I never saw a proposal to end subsidized loans. I saw a proposal to cap the amounts that students and parents could borrow.

    Trump's 2020 Higher Education budget proposal back in March included both ending subsidized loans and PSLF.
    edited September 2019
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  • thumper1thumper1 76517 replies3384 threads Senior Member
    @oscar2345

    Subsidized loans for graduate and professional students no longer exist. It’s very possible that these subsidies could disappear for undergrads at some point as well. But that isn’t the case right now.
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  • CorinthianCorinthian 1806 replies62 threads Senior Member
    edited February 10
    The DOE stuff starts at p. 132. https://www.whitehouse.gov/wp-content/uploads/2020/02/msar_fy21.pdf. Trump proposes to eliminate PSLF for new borrowers and end subsidized student loans for new loans.
    edited February 10
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  • amsunshineamsunshine 492 replies6 threads Member
    OMG. The nightmare continues.
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  • dadof2ddadof2d 241 replies17 threads Junior Member
    It also cuts work study by about half and eliminates gear up.
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  • kelsmomkelsmom 15793 replies99 threads Senior Member
    Caps on Parent & Grad PLUS. Yikes.
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  • mom2collegekidsmom2collegekids 84272 replies1046 threadsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    kelsmom wrote: »
    Caps on Parent & Grad PLUS. Yikes.


    I didn’t see what the individual caps are. where are they?


    “”Parent PLUS loans are made to some borrowers who will likely struggle to pay them back, which is unfair to borrowers and taxpayers. Students with Grad PLUS loans have already earned a bachelor's degree and likely have a credit history. The private market is well equipped to provide capital for these loans and the government should get out of the way. Reasonable limits on Grad PLUS loans will save taxpayers money, rein in the cost of college by moving away from unlimited availability of Federal financing, and allow the private sector to help rationalize these markets.””
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  • mom2collegekidsmom2collegekids 84272 replies1046 threadsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    thumper1 wrote: »
    I’m not a fan of student debt if avoidable.

    But cutting Grad Plus Loans will put things like medical school, dental school, veterinary school, law school out of the reach for all but wealthy families.


    but what are the limits?

    Such students could still have access to Direct Loans up to (I think) $20k per year.

    I haven’t found what the Grad Plus limits will be? $50k per year? more? less? or a max total?

    of course, Wells Fargo, Discover, Citizens Bank, SunTrust (now purchased by BBT) have long been doing Professional school loans and other student loans....so it appears that amounts beyond whatever those limits are would be covered by private banks.


    I do like that FINALLY Parent Plus loans won’t have that silly borrow whatever you want philosophy....even if it means that you only earn $25k per year and are borrowing for each of your 3 kids!

    (I personally know a single mom who earns less than $50k per year who has, so far, taken Parent Plus loans for $350k...and she still has one child who’s halfway thru college and one who hasn’t started yet. The older one is graduating in May. It’s insance that this was ever allowed..)

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  • HippobirdyHippobirdy 616 replies1 threads Member
    A problem is that the Congressional Budget Office has also proposed changes to subsidized federal loans since 2016 as part of ways to reduce federal spending over ten years..
    https://www.cbo.gov/budget-options/2016/52176

    Here is CBO's recent explanation
    https://www.cbo.gov/publication/56045
    "The Cost of Federal Student Loan and Repayment Programs

    January 24, 2020 Presentation
    Presentation by Justin Humphrey, an analyst in CBO’s Budget Analysis Division, to the Postsecondary National Policy Institute."
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  • HippobirdyHippobirdy 616 replies1 threads Member
    Here are excerpts from two major, opposing points of view

    The Heritage Foundation conservative think tank
    https://www.heritage.org/education/report/seven-essential-policies-higher-education-act-reauthorization

    "2. Consolidate Federal Loans into a Single Loan Program

    The federal government is now responsible for over 90 percent of all student loans, completely dominating the higher education financing market and creating little space for private lenders to compete. Evidence suggests that easy access to federally subsidized loans has led to rampant increases in college costs.5....

    3. Make Space for Private Lending by Eliminating the PLUS Loan Program

    The Parent PLUS program, which provides loans to parents of undergraduate students, and the graduate PLUS program, which lends to graduate students, are two of the greatest drivers of student loan debt. The PLUS loan program allows parents and students to borrow up to the full cost of college attendance. Students who attend law school, for example, may find themselves more than $200,000 in debt upon graduation, financed through a combination of the Stafford loan program and the Grad PLUS program....

    4. Eliminate Loan Forgiveness

    Rather than explore policy reforms that would help lower the price of college, lawmakers have been putting a Band-Aid on the problem by expanding loan forgiveness options. Loan forgiveness removes the financial responsibility of repaying a loan from the student who signed a contract to repay it, and transfers that responsibility to American taxpayers. Additionally, loan forgiveness creates perverse incentives in the student loan market, leading students to make certain financial decisions with the knowledge that someone else may pick up the tab...."


    For contrast, see the trade group for student financial aid administrators
    https://www.nasfaa.org/higher_education_act_reauthorization

    "DIRECT LOANS: Under the Direct Loan program, the federal government lends directly to students using federal capital. Federal contractors perform loan origination and servicing.
    · Loan Amounts: Establish a single annual limit but step aggregate limits. Eliminate loan proration for final periods of enrollment in programs that are at least a year in length; rather, allow schools to set lower limits for specific populations, academic programs, credential levels, or other categories established by the school. Allow high- performing schools, based on a CDR metric, to increase loan limits.
    · Loan Fees and Subsidies: Eliminate loan origination fees. Reinstate graduate student eligibility for interest subsidies. As of 2012, graduate students must repay interest accrued on Direct Loans while enrolled.
    · Separate Grad PLUS from Parent PLUS: The PLUS program encompasses both parents and graduate students, applying the same credit standard to both groups despite different borrower profiles. The programs should be separated, and underwriting standards for new parent borrowers tightened to include an assessment of ability to repay, such as a debt-to-income ratio.
    · Public Service Loan Forgiveness (PSLF): Retain the eligibility criteria to qualify for PSLF. Institute limits on the amount of forgiveness. Keep PSLF untaxed. Make PSLF program data public. Strongly encourage annual submission of employment certification forms. Increase communication to borrowers about PSLF.
    "
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  • thumper1thumper1 76517 replies3384 threads Senior Member
    @mom2collegekids IIRC the Direct Loan amount for medical school students is in the $40,000 a year range. For most, that barely covers tuition. It doesn’t cover living expenses. Many medical school students take the Grad Plus Loan.

    It’s really impossible to work during medical school. So how would these students qualify for private loans? Fact is...they wouldn’t.

    Like I said, without the Grad Plus, many of these students would not be able to pay for housing and other living expenses.

    And it’s not like most medical school students can “choose” to attend a school where they can commute from their parents’ home. They go where they are accepted, and many get one acceptance.

    Eliminating the Grad Plus will mean that only those wealthy enough to pay will be able to afford their living expenses during medical school...add to that dental school, law school, veterinary school, etc.

    There haven’t been subsidized loans for grad school students in years.

    I do agree that Parent Plus qualification needs to be tightened a bit.
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  • kelsmomkelsmom 15793 replies99 threads Senior Member
    The proposal doesn’t say what the caps would be, but caps have been discussed at the federal level for a number of years. Some advocate different caps for different types of programs, while others want a flat cap (a number often tossed out is around $20k/year).

    Private loans do not offer income based repayment. In my experience, private lenders do not have the best interest of the borrowers in mind ... I have seen that lead to deep financial crises that the protections of federal loans prevent.
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  • mom2collegekidsmom2collegekids 84272 replies1046 threadsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    edited February 11
    thumper1 wrote: »
    @mom2collegekids IIRC the Direct Loan amount for medical school students is in the $40,000 a year range. For most, that barely covers tuition. It doesn’t cover living expenses. Many medical school students take the Grad Plus Loan.

    It’s really impossible to work during medical school. So how would these students qualify for private loans? Fact is...they wouldn’t.

    Like I said, without the Grad Plus, many of these students would not be able to pay for housing and other living expenses.

    And it’s not like most medical school students can “choose” to attend a school where they can commute from their parents’ home. They go where they are accepted, and many get one acceptance.

    Eliminating the Grad Plus will mean that only those wealthy enough to pay will be able to afford their living expenses during medical school...add to that dental school, law school, veterinary school, etc.

    There haven’t been subsidized loans for grad school students in years.

    I do agree that Parent Plus qualification needs to be tightened a bit.


    private loans do not require that med students work or show income for their loans. private loans for med students are handled essentially like Grad Plus....there’s a trust that the student will graduate and earn good money since drop out rate is so low.

    I don’t see that Grad Plus will be eliminated. I see that they will be limited. Im trying to find numbers. if there will be a $$ limit and it’s not too low, then it would supplement the Fed Direct amounts for grad students. but again, the student could do a private loan for rest of med school costs.

    it appears to me is a strategy to force schools/grad schools/med/law schools to reign in costs. as long as people can borrow full COA no matter the COA, the schools will not feel the need to control/reduce costs. right now, it’s a free for all.....
    edited February 11
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