Federal policy spurs student borrowing

9/29/2012

Your Sept. 23 editorial "Default judgment" accurately cites high student-loan default rates and the need for greater counseling. However, the editorial, as other media coverage in this area, misses the key fact that federal policy encourages over-borrowing by denying institutions the ability to limit student borrowing.

Federal regulations that govern the issuance of student loans require financial aid officers not to limit borrowing by students. Federal policy mandates that schools "cannot engage in a practice of originating Stafford loans only in the amount needed to cover the school charges or limit unsubsidized Stafford borrowing by independent students."

Why can't an institution have a consistent policy of limiting student borrowing to its tuition amounts? Federal policy encourages many students to default.

If the U.S. Department of Education is serious about limiting default, it needs to start by fixing its own contradictory policies.

Gregory Guzman

Campus President Herzing University-Toledo Hill Avenue