Universities respond to new federal Grad PLUS loan caps

The new PLEDGE Scholarship from the California Law School is the first public response by a law school to federal Grad PLUS loan caps.

The scholarships will “relieve next year’s students from the kind of financial pressure that might otherwise preclude them from pursuing rewarding legal careers of great prominence and purpose,” Santa Clara Law Dean Michael Kaufman said in a statement.

Critics of the caps warn they will create funding shortfalls for students enrolled in high-cost professional programs. 

University of North Carolina Student Body President Adolfo Alvarez expressed alarm in a LinkedIn statement about the caps in federal loan assistance.

"It's going to be really damaging," Alvarez said.

Supporters argue that the limits address long-standing issues in the student loan system. 

Wayne Winegarden, senior fellow in business and economics at Pasadena-based Pacific Research Institute, told The Center Square in an exclusive interview that unlimited borrowing has fueled rising tuition costs.

"There's been a problem with the student loan program in that it enables schools to cost a lot of the subsidy that's been going to students to be able to kind of borrow, especially borrow cheaply, which has ended up just driving up the costs of universities," said Winegarden.

He urged students to weigh program expenses against future earnings potential.

“Financial realities don't go away just because we wish that they weren't there,” Winegarden added. “If you're going to be going to a university that costs $20,000 a year, you need to come out with a degree that increases your economic value.”