For many students, borrowing is critical for access to college. Borrowing limits should be set at levels that encourage choice and help borrowers avoid higher-priced private loans. Proposals to reduce current federal student loan limits may be intended to reduce debt, but, in fact, they exacerbate it.
Borrowing should also be structured so that students who finish college in four years have as much access to aggregate loan limits as those students who take longer to complete. Under a “loan flex” proposal developed by NAICU, loan amounts would be provided on the basis of progress toward degree completion.
The NAICU proposal, along with other suggestions related to the federal student loan programs, was submitted to the House Education and Workforce Committee for consideration in the reauthorization of the Higher Education Act. Loan flex would also accommodate innovations on time-to-degree, such as Summer Pell.