Copyright© 2007 by School Services of California, Inc.

                                      Volume 20                   For Publication Date: February 16, 2007             No. 4

Federal Loan Limits to Increase Under Bush Proposal 

In President Bush’s proposed 2008 budget, there was some good news for those in higher education. According to the U.S. Department of Education, the proposal would increase what college students can borrow from the federal government during their undergraduate careers by close to $7,500. This is the first increase since 1992. 

There is a ceiling on how much undergraduate students could borrow, depending on their tax status. For example, “dependent” undergraduate students could borrow up to $30,500.  The limit for undergraduates who are “financially independent” is $30,500 for those on Stafford loans. “Independent” students who take out both unsubsidized and subsidized Stafford loans could borrow up to $53,500. Graduate students would be allowed to borrow up to $73,000 in subsidized loans and up to $156,000 in total loans. 

The overall loan process does take into consideration that most undergraduate students do not complete their education in four years, so the increases will come in handy for students. The U.S. Department of Education estimates that the five-year cost of these changes is estimated to be $1.1 billion, which would be paid for by cutting federal subsidies to lenders. President Bush’s budget proposes reducing payments to lenders by $18.8 billion. 

Last year, Congress raised annual loan limits for freshmen and sophomores, but excluded juniors and seniors. Student advocacy groups have expressed concern over the proposal, indicating that raising limits could put more students at risk of larger debts. 

Luke Swarthout of the State Public Interest Research Group asserts that, “any move to increase the loan limits should be paired with proposals to protect students from taking on too much debt.” 

—Jamillah Moore, Ed.D.