Potential Changes to Federal Loan Programs

In late 2017 and early 2018 there was a flurry of news about plans to reauthorize the Higher Education Act, which governs student loan programs among other things. Both the PROSPER Act which passed through committees in Congress in December and the White House budget proposal earlier this year called for changes to loan programs, especially the PLUS loan program. (PLUS loans are those used by parents and graduate students. Despite their relatively high interest rates– in the 7% range– they are an attractive borrowing option for many families because one can borrow up to the full cost of attendance, and they include some modest borrower protections.)

Unfortunately, now that students and families are actually evaluating college acceptances and aid offers, other issues have supplanted this topic in the news cycle. Families who intend to finance college through borrowing should familiarize themselves with the potential changes, as these changes could have significant impact on affordability over time. Here is a good summary from US News & World Report.