SACRAMENTO, Calif. — A proposal released by the White House highlighted their priorities for reforming student loans and curbing the cost of higher education.
The student loan system is often targeted for reforms, but those attempts usually remain as just that, attempts. According to California State University Financial Aid Director Dean Kulju, something actually getting implemented is a lot rarer.
“This is nothing new, per se,” he said. “It seems like every year someone’s throwing out an idea on how to change or fix what they might perceive as a problem or issue.”
President Trump's student loan cap
The loan caps have a particular impact to graduate students because of the impact on Parent and Graduate PLUS loans. According to the University of California, a cap on those loans could put graduate studies out of reach for lower-income students.
However, even though the proposal is meant to focus on encouraging student borrowing, Kulju doesn't know how that proposal "would move the dial much."
Students already have a maximum that they "might be able to borrow" in their cost of attendance, and parents usually see the Parent Plus loan as a last resort option.
“It’s not an area where we think there’s abuse, and, for us, it’s not a huge volume anyway,” Kulju added. "So..., why target the parents per se or graduate students when this is one of just a few resources they generally have available to them."
Simplifying repayment plans
Other than the student loan cap, the proposal's ambitions on simplifying repayment plans have also caught some attention.
In the proposal, it talks about consolidating five different loan repayment methods into a single method. Those plans would be capped at 12.5 percent of the borrower’s discretionary income.
“This, I think, is a pretty good idea,” Kulju said, adding that the number of current options relating to loan repayment were akin to a “smorgasbord.”
Currently, there’s a standard repayment plan and five different options for income based repayment. According to Kulju, the program is highly complex, with multiple options, different qualifications for those options, and can also impact different proportions of a borrower's discretionary income.
The president’s proposal would reduce it all to one type of payment plan with a single cap that is available to everyone.
Considering that the range on proportions of discretionary income stretches from 10 percent to 20 percent, the 12.5 percent cap is considered reasonable.
Are California colleges "unable or unwilling" to make education affordable?
In their proposal to reform the Higher Education Act, the White House made a broad criticism that many colleges were "unable or unwilling" to make education more affordable.
As far as the CSU is concerned, the White House isn't talking about them.
A little more than 50 percent of their students have zero loan debt, and the other 49 percent with a debt average of about $17,500, compared to $30,100 nationally, according to Kulju.
Even the University of California reflects similar results. According to the UC, 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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