Preston Cooper of the American Enterprise Institute focuses on one key aspect of the “big beautiful bill.”
it includes a comprehensive set of reforms to the federal student loan program. These represent some of the most consequential changes to federal higher education policy in years.
Taken together, the changes to student loans will save taxpayers $307 billion over a decade, according to preliminary estimates from the Congressional Budget Office (CBO).2 But as this report’s analysis shows, the changes could also rein in the growth of tuition, prevent excessive interest accumulation on student debts, and hold colleges accountable for poor student outcomes.
The bill pursues these goals through three principal mechanisms. First, it sets limits on how much students may borrow from the federal government. Second, it overhauls student loan repayment to reverse some of the repayment system’s costliest aspects and ensure borrowers can pay down their debts. Finally, it creates a new accountability framework to deny student loans to colleges with poor outcomes. …
… OBBB introduces new annual loan limits for graduate students and parents of undergraduates (Table 1). Most graduate programs, including most master’s degree and PhD programs, will face an annual loan limit of $20,500. Students in professional graduate degree programs, which include medicine, dentistry, law, theology, and other degree types as defined in the Code of Federal Regulations, will be able to borrow up to $50,000 per year.
Colleges may set lower annual loan limits for particular programs if they so choose. Loan limits are prorated for students who enroll in college less than full time; a student who enrolls half-time would be eligible for half the loan limit of a full-time student.
In addition to annual limits, OBBB also subjects students to aggregate loan limits that represent the total maximum a student can borrow across their academic career.
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Author: Mitch Kokai
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