White House Suggests Capping Student Loans to Combat the Student Debt Crisis
The Trump administration on Monday proposed new limits on federal student loans taken out by parents and graduate students as part of a broader proposal to curb the cost of college.
Ivanka Trump, the daughter of President Donald Trump, unveiled the plan at a meeting of the National Council for the American Worker, an advisory group that Ivanka Trump helps lead.
“We need to modernize our higher-education system to make it more affordable, flexible and outcomes-oriented, so all Americans, young and old, can learn the skills they need to secure and retain good-paying jobs,” Ivanka Trump said on a call with reporters.
In a list of education priorities targeting reforms to the Higher Education Act, the White House said Congress should “institute Parent and Grad PLUS loan limits” to “encourage responsible borrowing.”
“Research shows a correlation between the availability of Federal student aid and tuition increases,” reads the proposal document. “The current system provides institutions of higher education with few incentives to control costs and saddles parents and graduate students with debt with little attention to borrowers’ likely ability to repay.”
The White House also suggested simplifying student loan repayment by consolidating the five current income-driven repayment options into one plan, capping monthly payment at 12.5% of the borrower’s discretionary income.
The White House also says that all federal borrowers should get undergraduate debt wiped clean after 180 months of repayment.
U.S. student loan debt, which reached nearly $1.5 trillion last year, has become a national epidemic as the cost of higher education continues to rise.