One of the key higher education policy interests of Senate Health, Education, Labor, and Pensions chairman Lamar Alexander (R-TN) has been to limit student borrowing in an effort to help reduce rising student loan debt. I’ve written in the past about how “overborrowing” is not as big of a concern as students not borrowing enough for college, but there is one group of students that may actually benefit from not being able to take out the maximum allowed amount in student loans.
Currently, students who attend college part-time can borrow the same amount as full-time students as long as there is space in their financial aid package. This can be a concern for students, as it means that they can run out of federal loan eligibility before they complete a bachelor’s degree. Current federal loan limits are the following:
| Year in college | Dependent student | Independent student |
| First | $5,500 | $9,500 |
| Second | $6,500 | $10,500 |
| Third | $7,500 | $12,500 |
| Fourth and beyond | $7,500 | $12,500 |
| Lifetime | $31,000 | $57,500 |
This equates to about four and a half years of borrowing at the maximum for dependent students and five years for independent students. Given that a sizable percentage of students complete a bachelor’s degree in more than five years, running out of loan eligibility before graduation can be a real concern for students. This is particularly true among students who begin at a community college, where tuition is relatively low compared to at a four-year college. If a student reasonably expects to take six years to complete a bachelor’s degree, then she and her financial aid office should have a conversation about how to best preserve her loan eligibility for when she needs it the most.
A fairly straightforward way to reduce the number of students who exhaust their loan eligibility would be to allow students to get a certain amount of money per credit hour. Students can currently receive a Pell Grant for up to 12 full-time equivalent semesters, with full-time defined as taking at least 12 credits. The current loan limit could be divided by 12 (roughly $2,600 per semester), or this could be done on a per-credit basis (perhaps $200 per credit) to recognize that students who take more classes need to work less.
A completely different proposal would allow students to use their student loan eligibility in any way they see fit. For example, dependent students could use their $31,000 in two years if desired—as long as they had space in their aid package. This idea of an education line of credit was raised by Jeb Bush in his short-lived presidential campaign, but it is unclear what Senator Alexander thinks of this proposal. At this point, it seems like the idea of limiting borrowing for part-time students at an individual college’s discretion is the most likely policy outcome.
Robert Kelchen 
I don’t understand how setting limits for PT students and not for full time would be smart. PT students tend to be working while attending school and therefore have an income, so shouldn’t it be the full time students that need to avoid taking too much in loans?
Thanks for your comment. There are already federal loan limits in place (as described in the post) that fit better for full-time students who can finish a bachelor’s degree in 4-5 years. I’m generally not concerned about undergraduates who borrow the maximum in federal loans–I’m far more concerned about students who need to access PLUS loans or borrow lots of money for graduate school than someone with $31,000 in debt and a bachelor’s degree who can enroll in income-based repayment.