Legislation & Lobbying

House Ups Student Loan Limits: Blessing or Curse?

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Updated: A bill to increase student loan limits that is intended to make it easier for students and their parents to get funding for college and graduate school in a private lending market that has been curtailed by a worldwide credit crunch passed the House of Representatives by a wide margin today. A companion bill has been introduced in the Senate.

“The measure would give the Education Department temporary authority to buy existing student loans at a discount to give lenders more cash for new loans. It would also allow the education secretary to send federal money to certain guarantee agencies, allowing them to act as ‘lenders of last resort’ to make new federally backed loans,” reports the Los Angeles Times.

However, some observers wonder whether the well-intentioned legislation will harm more than help students by encouraging higher debt loads and tuition increases, the newspaper notes. The bill would allow students who are dependents of their parents to borrow loans totaling as much as $31,000, up from $23,000, and raises the borrowing limit for independent students to $57,500, from $46,000.

Additional coverage:

Bloomberg: “U.S. House Backs Bill to Avert Student Loan Crunch”

Reuters: “House backs intervention in student loan market” Associated Press: “Congress Acts to Boost Student Lending”

Politico: “Hedge funds eye student loan market”

Wall Street Journal (reg. req.): “B of A to Halt Private Student Loans”

Updated at 3:50 p.m., central time, to add Associated Press coverage.

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