| These past weeks there has been talk in the | | | | professional school students who could not |
| higher education press about private lenders | | | | qualify for the maximum amounts for |
| and state guarantee agencies either | | | | subsidized interest loans. |
| withdrawing from the government-subsidized | | | | |
| student loan market or refusing to underwrite | | | | During the go-go Eighties, a graduate or |
| new loans. These financial institutions cite | | | | professional student could borrow up to |
| either a cash crunch or a credit crunch, or | | | | $5,000 a year from the subsidized interest |
| reductions in the federal interest subsidy as | | | | loan program - but had to prove financial |
| the reasons for pulling back on such loans. | | | | independence or go through a means test along |
| | | | with their parents. Then they had to turn to |
| These are all legitimate reasons for the | | | | the unsubsidized loans - popularly known as |
| private financial markets to back out. | | | | PLUS loans to make up the difference. Back in |
| Student loans were never meant to be a profit | | | | those days, the subsidized loan and the |
| center when they were first proposed by the | | | | unsubsidized loan together with some |
| federal government under President | | | | employment could pay almost the full freight. |
| Eisenhower. The purposes of student loans are | | | | |
| to make college affordable and accessible to | | | | That's not the case today. |
| anyone who is admitted to college and to help | | | | |
| them establish good credit early in the | | | | It's easy to blame the colleges; their |
| working lives. | | | | administrations make the tuition decisions, |
| | | | not the federal government. But they are just |
| When I applied for my first student loan 30 | | | | like other businesses that must deal with |
| years ago, I could borrow up to $2,500 and I | | | | escalating health care costs (tenured college |
| didn't need to pay an origination fee. Today, | | | | faculty are more senior level workforce than |
| the maximum a college freshman can borrow | | | | most government agencies and private |
| under the subsidized loan program is $3,500; | | | | corporations); fuel prices (larger schools |
| considering inflation it's a lot less than I | | | | own and operate as much housing as some |
| could have borrow 30 years ago and covers a | | | | medium and large-sized cities) and pensions. |
| much smaller share of the costs! The $2,500 I | | | | |
| could borrow in 1978 would have covered more | | | | There will need to be a major redesign of the |
| than half the cost of my freshman year at | | | | student loan programs in the next |
| Rutgers. The $3,500 I could borrow today | | | | presidential administration not only to |
| would cover less than a fifth of the | | | | reconsider outdated borrowing limits, but |
| freight-assuming I received the full amount | | | | also the means tests and multiple government |
| after going through a means test! | | | | loan programs with their own set of |
| | | | regulations and bureaucracies. In an ideal |
| The federal unsubsidized interest | | | | society, students should not end their higher |
| (unsubsidized meaning the borrower or their | | | | education owing more than their first year's |
| families pay the interest while the borrower | | | | salary in their chosen field. |
| is in school) loans were a creation of the | | | | |
| Reagan Administration. They were initially a | | | | That's a lofty ideal, but one worth reaching |
| means of providing loans for graduate and | | | | for. |