Federal Student Loan Effectiveness: Part 2

Should the federal student loan system be modified? Can its accessibility and effectiveness be improved?


There is no doubt that student loans are not ideal for borrowers, and the less debt the better for the students. However, this does not mean that large-scale change in the federal loan program is necessary. The Free Application for Federal Student Aid (FAFSA) verification process is certainly in need of improvement because of its logistical difficulties and unnecessary complications. Because students, especially low-income students, are potentially making their decisions on attending and graduating from college based on this process, it is logical to make it as efficient and simple as possible.
Furthermore, indexing the Pell Grant amount to inflation is a simple and effective way of controlling for the natural inflation in the United States economy. However, additional spending (e.g. increasing the amount past what it becomes with inflation) is not recommended. The United States already spends more money on education per student than any country besides one and expending more resources on the Pell Grant program would drastically increase this figure. Since there are 6.8 million Pell grant recipients, increasing the maximum grant amount to $10,975 (which is half of tuition at a 4-year public school) would result in an 81% increase in spending1 on the program. This translates to an additional $22.7 billion, which is more than the United States government can spare. For comparison, President Trump requested just $1.9 billion to be redirected from Pell Grants to NASA for a new moon trip, and the entire Department of Education budget for 2020 is $72.7 billion. There is simply too money required for a plan of this magnitude to be feasible, especially under this administration which has proposed an 8.5% reduction in education spending for the upcoming year.
              Finally, the Public Service Loan Forgiveness (PSLF) program should be eliminated. Although the idea of aiding public service workers may seem like a good one, the system has proven to be highly inefficient. Since March 2017, when the first people became eligible to receive forgiveness, just 1,216 applicants out of 110,729 (1.10%) have been accepted for their loans to be forgiven. The program has many requirements that are confusing and inconvenient, so many people do not realize they do not qualify for forgiveness. The Republican budget proposal for the upcoming year would eliminate the entire program, reducing the amount of repayment plans. In addition, it consolidates student loan repayment into a single income-based repayment plan. This would not affect those who could potentially still use PSLF (if they somehow manage to get accepted), just future borrowers.
              Although there are certainly issues with the current federal student loan system in the United States, there do not necessarily need to be drastic alterations. Minor adjustments such as simplification of the FAFSA system and indexing the maximum Pell Grant amount to inflation should significantly improve the experience of incoming and former college students alike, while conserving the government’s overall spending on education.


1This is assuming that the ratio between maximum amount and average amount stays roughly the same as it is currently.

Works Cited

"Fiscal Year 2021 Budget Summary." U.S. Department of Education, 2020, www2.ed.gov/about/overview/budget/budget21/summary/21summary.pdf. Accessed 17 Feb. 2020.

Friedman, Zack. "Trump Calls For End To Student Loan Forgiveness Program." Forbes, 11 Feb. 2020, www.forbes.com/sites/zackfriedman/2020/02/11/trump-student-loans-forgiveness/#6913897b6b3d. Accessed 17 Feb. 2020.

Nykiel, Teddy. "Public Service Loan Forgiveness: What It Is, How It Works."
     Nerdwallet, 1 May 2019, www.nerdwallet.com/blog/loans/student-loans/
     public-service-loan-forgiveness/. Accessed 6 Aug. 2019.

"Pell grants: recipients, maximum Pell and average Pell." College Board, 2019, research.collegeboard.org/trends/student-aid/figures-tables/pell-grants-recipients-maximum-pell-and-average-pell. Accessed 17 Feb. 2020.

Tucker, Marc S., editor. Surpassing Shanghai: An Agenda for American Built on the World's Leading Systems. 2nd ed., Cambridge (MA.), Harvard Education Press, 2011.


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