College freshmen already worried about increasing debt will gain little relief from the government this year.
President Bush requested that Congress increase the limits on federal student loans for freshman college students as part of the 2005 budget request released last week. The change was mostly insignificant, considering the rate has been in place since 1986.
Even with the many changes in the economy and inflation over the years, Bush recommended that freshman students be able to borrow $3,000 from the federal student loan programs, an increase of $375.
"We're certainly happy" with the increase, Associate Vice President for Finance of Student Financial Services Frank Claus said, acknowledging that the change was long overdue.
"We would rather see it more generously provided for by the federal government," Claus said, but "we recognize there are budget restrictions."
The restrictions on student loans for freshmen have been in place for 24 years -- "a pretty amazing amount of time" without change, according to Theodore Bracken, director of federal relations for the Consortium on Financing Higher Education. Describing the president's request as "fairly modest," Bracken said that although the change is "certainly a positive thing ... it's only a start in the process."
Bracken added that Bush's request to only increase loan rates at "the lowest level in the smallest possible amount ... doesn't even really begin to address the problem."
Not only does the increase fall short of student need, it also only applies to freshman. Sophomores, juniors, seniors and graduate students are all still left with little choice but to apply for private loans if financial aid is not enough. With the likelihood of interest rates going up at a very high rate, according to Bracken, students will be left paying significantly more for private loans over the years.
Bracken also recognized the possibility that Congress could alter the president's recommendations, either increasing or decreasing the rate according to their budget. "It's only a request," Bracken said. "The Congress could do whatever it wants."
Claus noted that the University's financial aid program goes beyond some other colleges to make sure that every student has the aid they need.
"The University of Pennsylvania has a very liberal and generous need-based financial program," he said. "Whether it be by loan, grant or work-study ... [students] don't go without" funding.
Instead of relying completely on government funding, Claus noted that the University would expand funding at risk to its own budget, instead of the government's budget, in order to best provide for students.
The Center for Better Student Loans issued a statement recognizing the importance of the administration's new focus on changes to student loan programs, noting that it "is clear that [Bush] recognizes that the current federal loan programs do not meet the needs of today's students and families."
The center added that "while much more needs to be done in both loan and grant programs for students, [Bush's] proposals represent an important first step in bringing the federal student loan programs up to date with the reality of student costs."
Claus expressed disappointment about the government's funding of the Pell Grant, a source of financial support for low-income students. According to The Chronicle of Higher Education, the president's request would not provide any additional funds for the Pell Grant, which remains at a maximum of $4,000 for the third year in a row.
