SACRAMENTO, Calif. — A proposed cap on student loans from President Donald Trump’s administration may put graduate or upper-level studies out of reach for some low-income students.

“The caps on loans will likely put graduate and professional studies out of reach for many of the low-income students UC serves at the undergraduate level, or force them to take out private loans that lack the protections and low-interest rates provided by federal loan programs,” said University of California spokesperson Claire Doan in a statement to ABC10.

The administration’s plan aims to curb the growth of college tuition rates, which have reached $1.5 trillion, and make it more "outcome-oriented." It aims to do so with proposals on the following: 

  • Simplifying loan repayments 
  • Allowing students to use Pell Grants for short term programs 
  • Improving outcome-based transparency 
  • Expanding federal aid for workforce training to prisoners eligible for release
  • A proposed loan cap on Parent and Grad Plus loans

The White House referred to the loan caps as “common sense limits” to federal loans for students’ parents and graduate students.

RELATED: White House proposes caps on student loan borrowing

Although the University of California was unavailable for an interview regarding the impact of the administration's proposal on their UC students, Doan was able to address, in her statement, that cap limits would "greatly affect" some graduate students.

In particular, it would impact the graduate students who don't receive federal research grants and would not be able to borrow funds up to the cost of their attendance.

“Many low-income students lack access to capital and credit to obtain favorable rates in the private loan industry,” Doan continued. “UC believes that the repayment programs should be streamlined, but not at the expense of the students who need access to loans with protections and favorable terms.”

The White House criticized colleges and universities that “have been unable or unwilling to provide the necessary types of education in a cost-effective manner.” A 2018 Brookings Institution study was cited that found close to 30 percent of student borrowers eventually default on their loans.

The national average for student debt is around $30,100. However, for UC students with loans, their average at graduation is about $10,000 less than what the rest of the country sees as the UC attempts to mitigate loan debt "to the extent possible with financial assistance."

According to the University of California, about 57 percent of their students pay no tuition based on their family income and about 52 percent of students graduate with no student loan debt.


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