Don’t look now, but at least a few congressmen have realized that, when it comes to the student debt bubble, at least, the feds are part of the problem. Senator Tom Harkin (D-IA), the chairman of the Committee on Health, Education, Labor and Pensions, is calling on the federal government to reintroduce caps on borrowing for graduate students, and to lower the existing limits on borrowing for non-school expenses for undergrads.The caps on student loans had been in place for years before being removed in 2006. Harkin and others now say that change was a mistake, the WSJ reports:
Mr. Harkin voiced alarm about the lack of a borrowing limit at a hearing Thursday. In an interview afterward, he said he “absolutely” would look at whether a limit should be reinstated as part of legislation set to be debated this year on higher-education policy.“Why would [the government] grant loans with no limits? I don’t get that,” Mr. Harkin said in the interview. “I’m going to look at how this came about in 2005, whose idea was this, how did this develop.”
Lamar Alexander (R-TN), the ranking Republican on the Senate Education Committee, has also spoken about the need to limit student borrowing. This bipartisan concern is timely, as a recent report has found that graduate students account for a disproportionate amount of student debt, precisely because there is no longer a cap on borrowing for graduate programs.Given that the abundance of federal loans has contributed to the rise of college tuition over the past few years, this strikes us a smart policy. This is not the thorough review of the federal loan program that we would like. But at the very least, politicians on both sides of the aisle are beginning to see the flaws in relying on free-flowing loans to make college more accessible.