The White House on Monday proposed a cap on federal student loans — part of a broader initiative intended to curb the rising cost of higher education.
In a blueprint to reform the Higher Education Act, a 1965 law, the Trump administration suggested limiting loans taken out by graduate students and parents of undergraduates to help pay for college or trade school. It’s unclear what the exact loan cap would be, but according to the Hill, it could vary by program rather than institution.
“Unfortunately, many colleges and universities have not been providing Americans the education they need to succeed in a cost-effective manner,” White House press secretary Sarah Sanders said in a statement on Tuesday.
It marks the most comprehensive effort so far by the Trump administration to fulfill its higher education agenda. The Higher Education Act was previously amended in 2008.
"Members of Congress who are committed to ensuring Americans thrive in today’s strong, modern, and growing economy should support and pass these reforms," Sanders said.
Other initiatives outlined in the proposal include: requiring universities to accept taxpayer funds to share in the financial responsibility that comes along with student loans, helping students complete their education more quickly to reduce borrowing costs and consolidating repayment option that caps monthly payment at 12.5 percent of the borrower’s discretionary income.
In the second quarter of 2018, student loan debt reached a staggering $1.53 trillion — a burden that’s largely being borne by millennials. Many experts, including Federal Reserve Chairman Jerome Powell, have warned that burgeoning student loan debt could derail an otherwise strong economy by hindering people’s “economic life” and lowering credit ratings.
"It will over time. It's not something you can pick up in the data right now. As this goes on and as student loans continue to grow and become larger and larger, then it absolutely could hold back growth," explained Powell, when asked whether student debt could hurt economic growth in the long-run.