In light of the crunch in the credit markets, the U.S. House of Representatives passed a bill on Thursday that will increase the maximum amount that a college student can borrow from the government for educational purposes.
"It's been [a priority] for a while now," Tony Pals, spokesman for the National Association of Independent Colleges and Universities, said.
Pals added that the federal loan limits have not been raised in 15 years.
Because the price of attending college has increased but the amount of money a student can borrow has not kept pace, Pals said, many students have been turning to the private-loan market to pay for tuition. These loans often come with higher-interest rates for students.
The private-loan industry has also seen turmoil in the past several months, and several private lenders have recently announced plans to stop lending to students who do not meet certain criteria.
Under the new legislation, the maximum amount that a dependent student - one still supported financially by his or her parents - can borrow from the government will raise by $2,000 per year, bringing the aggregate total that a dependent student can borrow over four years to $31,000.
The bill also raises the cap that financially independent students can borrow from $46,000 to $57,500.
"This bill will provide a necessary backstop to ensure that all students have uninterrupted access to low-cost federal loans," Rep. Ric Keller (R-Fla.), a member of the House Education and Labor Committee, said in a statement.
Although the measure - supported by all Philadelphia-area legislators - passed 383-27 in the House, Bill Andresen, the head of Penn's Washington office, expects a little more resistance when the legislation comes before the Senate.
This resistance is likely to come from "the more conservative members of the Senate [who] don't really believe the government needs to get involved any further," in the credit crunch, he said.
He added that this bill is likely to be the extent of Congress' reaction to the issue.
Students at Penn, however, are unlikely to be affected by the recent rise in the student-loan cap.
"The students in the schools that are most likely to be affected ... are schools with lower graduation rates," Andresen said.
The House's move was particularly timely, as both Citibank and Chase Education Finance, two of the largest originators of student loans, both announced last week they would cease lending to students who attend schools that don't meet their criteria.
© 2008 Daily Pennsylvanian via U-WIRE