4.3: Student Loan Programs
ELIMINATE IN-SCHOOL SUBSIDIES IN FEDERAL STUDENT LOAN PROGRAMS. Other Information:
Eliminate income-based subsidies for federal student loan borrowers and better target hardship relief for loan repayment.
(Saves $5 billion in 2015, $43 billion through 2020) In light of recent legislation targeting student loan subsidies based
on the income of the payer, the Commission proposes to eliminate in-school interest subsidies in federal student loan programs,
which Over the past several years, federal student loan policy has emphasized the principle of focusing student loans subsidies
on reducing the burden of repayment and providing generous repayment protection. Targets subsidize student loans subsidies
based on family income prior to the student’s enrollment in college, rather than on the student’s ability to pay after completion.
According to a recent paper by The College Board, the most important consideration in enrollment decisions is how much the
student will owe at the completion of studies, and there is no evidence that eliminating in-school interest is critical to
that amount or to individual matriculation.
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