Experts Suggest New Ways to Pay for College at National Symposium on Student Loans
Submitted by Valerie Gonzalez, EDFUND

At a symposium late last year Washington, DC, Advancing America's Competitiveness: The Role of Student Loans, leading researchers and policy experts introduced several innovative proposals in response to rising student debt levels in the U.S.

Co-sponsored by the Project on Student Debt and the American Enterprise Institute, the event brought together experts on student loans programs and trends, tax and budget policies, college access, and the role of debt in young people's lives.

They addressed three provocative questions:

1. Are college students borrowing too much, or not enough?
2. Can the federal investment in student loans accomplish more?
3. Are there tax solutions to the high cost of borrowing?

Panelists offered several proposals for redesigning federal student loan and tax provisions to maximize educational opportunity.

These include:

• A repayment system in which borrowers would not have to start paying off student loans until their post-college income reaches nearly $19,000. Above that amount, payments would not exceed a certain proportion of income, and that proportion would rise with earnings.
• A student loan forgiveness program for married borrowers with children -- $5,000 for each child up to a total of four -- to limit the impact of student debt on family formation.
• A student loan repayment tax credit that could be claimed for both principal and interest when payments exceed approximately 10% of the borrower's income. Preliminary estimates indicate that such a credit would cost less than the current mix of higher education tax benefits.
• A new structure for tuition tax credits that would be simpler and easier to use, provide more aid to lower income families, and reduce the need to borrow.

To access the entire report, visit the Project on Student Debt Web site, www.projectonstudentdebt.org.

© EDFUND 2006. www.edfund.org
EDFUND, a nonprofit public benefit corporation, is the nation’s second largest provider of student loan guarantee services under the Federal Family Education Loan Program. EDFUND offers students a wide range of financial aid and debt management information while supporting schools with advanced loan processing solutions and default prevention techniques. For more information about EDFUND products and services, contact Valerie Gonzalez, Senior Client Relations Manager – toll free 866.353.4950 or vgonzale@edfund.org.