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FEDERAL STUDENT LOAN POLICY

Outline for Federal Student Loan Policy Paper


I.

Introduction of Current Policy


A) Stafford Loan Policy July 2012
B) Annual Aggregate Limits for Loans
a. First year undergraduate
i. Dependent students - $5,500, no more than $3,500 is in subsidized
loans.
ii. Independent students (or dependent students whose parents could
not obtain a PLUS Loan) - $9,500, no more than $3,500 in
subsidized
b. Second year undergraduate
i. Dependent students - $6500, no more than $4500 in subsidized
loans.
ii. Independent students (or dependent students whose parents could
not obtain a PLUS Loan) - $10,500, no more than $4,500 I
subsidized loans.
c. Third year and beyond undergraduate annual loan limit
i. Dependent students - $7,500, no more than $5,500 in subsidized
loans.
ii. Independent students (or dependent students whose parents could
not obtain a PLUS Loan) - $12,500, no more than $5,500 in
subsidized loans.
d. Graduate and professional

FEDERAL STUDENT LOAN POLICY

i. $20,500 unsubsidized only


ii. Subsidized and Unsubsidized Aggregate Loan Limit
iii. Dependent students - $31,500, no more than $23,000 in subsidized
loans.
iv. Independent students (or dependent students whose parents could
not obtain a PLUS Loan) - $57,500 for undergraduates, no more
than $23,000 in subsidized loans
v. $138,500 for graduate or professional students, no more than
$65,000 in subsidized loans. The graduate federal limit includes
all loans received in undergraduate studies.
II.

History of the student loan policy


A) First major financial aid policies implemented by Congress in 1958.
B) Congress decided to put America in school in 1958 when the Soviet Union
launched Sputnick.
a. 1958 National Defense Education Act, which established the Perkins Loan
as a precursor.
b. 1965 Stafford Loans were created
C) Congress given power to delegate bankruptcy laws
a. Student loans became more difficult to declare bankruptcy on, unless an
undue hardship could be proven.
b. Three major bankruptcy law reforms were made.

III.

Problems with Student Loans and Financial Aid


A) Consistent increasing tuition rates

FEDERAL STUDENT LOAN POLICY

B) Constant increasing student debt


C) Gaps in funding arise from tuition rising and the amount of loans staying the
same.
D) Student loan debt
a. Students with education debt are unable to pay because of lack of
employment.
b. Parents and Grandparents are in debt to student loans regarding their
children/grandchildren.
E) Low-income families struggle to afford postsecondary education
F) Ethnic minorities are unable to afford college
a. The Rodriguez and SLM Corp. class action lawsuit.
G) Number of students with student loan debt reaches $1.1 trillion as of 2013
a. The Great Recession
b. Goals of current policy
c. Parents and grandparents go in debt to student loans
d. Federal deficit
H) Policies in place to address this concern include:
a. College Cost Reduction Act (CCRA)
b. Public Service Loan Forgiveness Program
c. Income Contingent Repayment (ICR)
d. Pell Grants and Scholarships
I) Impact of limits place on Stafford Loans
a. Positive impact limiting the amount of student loan debt

FEDERAL STUDENT LOAN POLICY

b. Negative impact by not allowing students to take more classes because of


limited available funds
c. At risk populations struggle
d. Federal Perkins Loan
IV.

Supporters and Opposers


A) Democratic Presidential Candidates for 2016 stance on financial aid and student
loan debt
a. College Affordability
B) Republican Presidential Candidates for 2016 stance on financial aid and student
loan debt
a. Student Investment Plan
C) Hillary Clinton, Bernie Sanders, Lincoln Chafee, Martin OMalley, and Jim Webb
D) Jeb Bush, Chris Christie, Donald Trump, Carly Fiorina, Lindsey Graham, Ted
Cruz, Mike Huckabee, Bobby Jindal, John Kasich, George Pataki, Rand Paul,
Rick Perry, Marco Rubio, Rick Santorum, and Scott Walker

V.

Policy Analysis
A) What works and what does not work:
a. Placing limits on financial aid works to decrease the amount of student
loan debt but also makes funds less obtainable for low income students
and those who need excess funds for spring/summer semesters.
b. Those who do not graduate will be faced with student loan debt and no
degree to obtain a better paying job.
c. With tuition rising and the loan amounts not increasing eventually low

FEDERAL STUDENT LOAN POLICY


income populations will not be able to afford the costs.
d. Students from disadvantaged backgrounds have a higher rate of
enrolling in two-year concentration programs.
e. One in five students from the lowest socioeconomic class enrolled in a
four year institution.
f. New policies to reform old ones and make college more affordable.
B) Repayment programs for loans Poorly targeted and very complex
VI.

Conclusion
A) Advocates opinion of current policy