Bush's FY '08 budget increases federal loan limits for students
AU students may soon be affected by the Bush administration's proposal to increase the federal loan limits for undergraduates and graduates.
The proposed increases were first made public Feb. 5 with the release of President Bush's Budget of the United States Government for the fiscal year 2008.
According to the Budget, dependent undergraduate students, who are financially assisted by their parents or guardians for their college education, would be able to borrow an additional $7,500 from the federal government throughout their undergraduate careers. This would enable dependent students who can currently borrow a maximum of $23,000 from the government to borrow a total of $30,500.
Bush's budget also proposes that graduate students seeking financial aid from the government have an additional $7,500 to borrow for subsidized loans, bringing their subsidized loan maximum to $73,000.
Undergraduate students who receive no money from their parents or guardians to pay for college would also be able to borrow up to an additional $7,500 from the government, according to the budget.
The budget proposes that undergraduates who rely on a federally subsidized Stafford Loan, which is a need-based loan for students who attend school at least half-time in which the federal government pays the interest, should have a loan limit increase from $23,000 to $35,000. If an undergraduate acquires a subsidized Stafford Loan and an unsubsidized Stafford Loan, which students pay interest on and are only permitted to have if their school determines they need further loans, their loan limit would increase from $46,000 to $53,500.
The National Association of Student Financial Aid Administrators (NASFAA) reported that to offset the cost of these proposed increases, which coincide with proposed increases in funding for the Pell Grant program, the Bush administration proposes eliminating certain financial aid programs and cutting others.
Among the programs the Bush administration proposes to eliminate is the Federal Supplemental Educational Opportunity Grants (FSEOG) Program, which loans money that doesn't have to be paid back to students who have the lowest Expected Family Contribution levels.
Leigh A. Riddick, an associate professor of finance in the Kogod School of Business, said she believes the increase in the federal loan limit will be beneficial to students.
"Upper education is expensive and financial aid is always a help," Riddick said. "I don't see a lot of downside here for the students, unless they don't understand the increased indebtedness they face later."
Some AU students said they have done their homework on the issue.
Luke Kraus, a freshman in the School of Public Affairs, said he favors Bush's proposal.
"Knowing that tuition increases around 6 percent a year it would seem necessary to raise the limit on federal loans for students," he said. "The loan limit should at the very least be raised at the rate of inflation and since it hasn't been raised in 15 years, a significant raise seems necessary."
Among AU students, an increase in the federal loan limit is recognized as having a potentially harmful side as well.
Aimee Ghosh, a senior in SPA, said this is an issue that has merits and disadvantages.
"It's a double-edged sword," Ghosh said. "On one side, people get a lot more money they need to push for their current academic endeavors. On the other hand, the more money people borrow, the more likely they will have prolonged periods of debt after they graduate"