(Part 1) What are the recent legislative proposals for student aid programs?
Recent legislative proposals could significantly alter federal student aid programs, including Pell Grants, unsubsidized loans, and Parent PLUS loans. Here's an overview of the potential changes:
🎓 Pell Grants
Expanded Eligibility: The proposed legislation aims to extend Pell Grant eligibility to students enrolled in short-term training programs. However, eligibility would require students to complete at least 30 academic hours per year, which may limit access for part-time students.
Work-Study Programs: There are considerations to modify work-study programs, potentially impacting the availability of part-time employment opportunities for students.
💰 Unsubsidized Loans
Borrowing Limits Under the proposed changes, federal student loans would have new borrowing caps:
Undergraduates capped at $50,000
Graduate Students capped at $100,000
Professional Students capped at $150,000
These caps are set to take effect on July 1, 2026.
Interest Subsidies The proposal includes eliminating interest subsidies on federal student loans while borrowers are enrolled in school, which could increase the overall cost of loans for students.
👨👩👧 Parent PLUS Loans
Program Sunset: The legislation proposes to phase out the Parent PLUS loan program for new borrowers starting July 1, 2025, with complete elimination by 2028. This change would require parents to seek alternative financing options, such as private loans, which may offer less favorable terms.
⚖️ Accountability Measures for Colleges
"Skin-in-the-Game" Provision: The proposal includes measures that would require colleges to reimburse the federal government for a percentage of defaulted student loans, based on factors like program cost and graduate earnings. This aims to hold institutions accountable for student outcomes.
📉 Potential Impacts
Increased Financial Burden: The elimination of interest subsidies and the introduction of borrowing caps could lead to higher costs for students and families.
Access to Education: Changes to Pell Grant eligibility and the phase-out of Parent PLUS loans may reduce access to higher education for low- and middle-income students.
Institutional Accountability: While holding colleges accountable for student loan defaults, the proposed measures may also lead to reduced institutional support for students.
These proposals are part of broader efforts to reform the federal student aid system, aiming to reduce costs and increase accountability. However, they also raise concerns about potential negative impacts on students' access to affordable education.
For continued insights on this topic, look out for Part 2 & 3 of this 3-part series! At Omnia Pathways, we believe that paying for college is one of the largest, most significant investments that a student and their families make in their lifetimes. We recognize this process is overwhelming and offer assistance in your search for scholarships, grants, and loan opportunities. Please see our Services for more information and schedule a Free Consultation, to help you accomplish your college admissions goals.
*Citations will be included at the end of this 3-part series.