Federal grants and loan

Paying for college is a major investment, and for more than two-thirds of families, federal student loans are vital Below-market federal student loans make more sense than higher-interest credit tools, but given Limited government funds for grants and loans, private Loans will be the only viable, yet costly, option for many students. "Without changes to the federal student loan program," said Jim Boyle, president of the Association for College Parents of America, "most students will have no alternative but to work too many hours, take out too many loans, run up credit card debt, or drop out of school."

Boyle spoke at a September news conference hosted by the Coalition for Better Student Loans, reporting on a nationwide survey of students and financial aid administrators that stresses the need for Congress to help alleviate the financial burden on college students.

Besides the College Parents of America, Coalition members pushing for change include the National Association of Student Financial Aid Administrators (NASFAA), the National Association of Independent Colleges and Universities (NAICU), the Association of American Universities (AAU), the American Council on Education (ACE), and representatives from some 2,000 colleges and universities.

The Coalition is pushing for an increase in the maximum amount of federally funded dollars undergraduate students can withdraw.

The four-year undergraduate loan Limit currently is $18,500, but that number should be $30,000. "The maximum loan amount has not been adjusted for inflation," said Boyle. "It has been static since 1992."

NASFAA President Dallas Martin said changes are necessary to stem a worsening situation. "Clearly, students would much prefer to have grant aid than they would to have student loans. But, the reality is that we know that there won't be that kind of increase in grant aid to meet the needs of students currently enrolled in school as well as the increasing number of high-need students who will be enrolling in the next few years," Martin said.

"Our proposal is a comprehensive set of student-friendly changes to the student loan program designed to address the full continuum of issues students face when they get to college, and in repayment," he said.

The Coalition's five-part proposal is designed to Lower the cost of borrowing when students get to college, ensure funding adequate to meet educational expenses while enrolled, and make it easier to repay loans when they graduate from college.