Panel OKs Doubling Loan Limit for College Students

The House Education and Labor Committee approved a bill Tuesday that would double the amount undergraduates could borrow in their last two years of college and give new teachers a five-year grace period on repaying loans.

The proposed revision of the Higher Education Act would also extend for five years the whole network of federal grant, loan and work-study programs that provide about $9 billion annually in aid to half of the nation’s 12 million college students.

In a move to make parents share in the costs of their children’s education, the bill would require all students under age 23 to report their parents’ income when seeking financial aid, unless the students are married, orphans, military veterans or otherwise financially independent.

Increase in Pell Grants

The bill would raise the maximum under the Pell Grants, the federal scholarship based on need, from $2,100 to $2,300 for the 1987-88 academic year. There would be $200 increases annually through 1991-92, when the maximum would hit $3,100.

The measure would retain the current $2,500 limit on how much college students could borrow in their first two years but allow juniors and seniors to borrow $5,000. Graduate students, now limited to $5,000 in guaranteed student loans annually, could borrow up to $8,000.

It would require all students, not just those with family incomes above $30,000, to demonstrate need before getting the subsidized loans.

The grace period for new teachers is designed to attract more people to the profession. There is now no grace period for new teachers on repaying college loans.

Rep. Mario Biaggi (D-N.Y.), who sponsored the provision, said that the nation’s shortage of teachers “is disgraceful. It borders on the criminal.”

End to Origination Fee

The bill also would phase out over five years the 5% origination fee that students now must pay when they take out loans.

The measure would lift the interest rate on guaranteed student loans to 10% during the fifth year of repayment. The rate now is 8% for first-time borrowers. They pay no interest while in school.

The committee also voted to force colleges to allocate at least 75% of their Supplemental Educational Opportunity Grants to students who also qualify for Pell Grants.

The committee approved the measure by a 26-2 vote.

A Senate subcommittee recently began hearings on the Higher Education Act, but no votes are expected until next year.