On March 18, President Trump proposed a reform to the Higher Education Act that could affect a cap on certain student loans along with a readjustment of the student loan repayment plans.
The Higher Education Act (HEA) was originally passed under President Johnson in 1965, and according to an article published in December 2018 on savingforcollege.com, the act authorizes most federal student aid. Cheri Yecke, previous assistant provost for research and graduate programs at Harding, has extensive experience in education and higher education policy-making.
Yecke said that the HEA is supposed to be reauthorized every four to six years; however, in reality, the act is reauthorized roughly every seven to 10 years. The act has been reauthorized eight times with its last reauthorization in 2008.
Among multiple other changes, Trump is proposing that the HEA be reformed to “Encourage Responsible Borrowing,” “Simplify Student Aid” and “Give Prospective Students More Meaningful and Useful Information about Schools and Programs.”
Yecke said that because of the increase in student loan debt accrued since the HEA’s last reauthorization and the changing student demographics in college, the act is due for reexamination. She said she believes that the proposed cap on student loans is a good thing overall. However, she said it also overlooks programs that may cost more tuition dollars to complete but will get students jobs that will allow them to pay back more money in loans.
“I think consideration should be given to a sliding scale on how much you can borrow,” Yecke said. “The more expensive the program, the more you should be allowed to borrow.”
Mark Farley, professor of economics, said that he believes that putting a cap on student loans may deter some people from borrowing, but any cap will land on the higher end of funds students would be allowed to borrow.
There is currently a cap on subsidized and unsubsidized student loans, according to studentaid.ed.gov; however, this does not include Parent and Grad PLUS loans, which the reform proposal is addressing.
Farley said student debt is a huge problem, and institutions may be part of the problem, which is addressed in the proposal.
Dr. David Bangs, chair of graduate studies in education, suggested a solution might be better student advising on the front end.
“When you consider our country, with 1.5 trillion in [student loan] debt … it’s a runaway train,” Bangs said. “It has to have some type of restructure to get it under control. And it may just be better counseling.”
Bangs also said the proposal could affect those in the education field with the proposed loan repayment reforms. The streamlined reform would remove the “Public Service Loan Forgiveness” program that educators benefit from and institute a repayment cap of 12.5 percent of a borrower’s monthly income and forgive any remaining debts after 15 years of payment for all borrowers, not just those who work in public service.
Yecke said she believes this streamlined repayment reform is a move in the wrong direction because it does not encourage students to borrow responsibly.
