Last week I filled you in on how the new stimulus plan could seriously (positively) impact college students, and I wanted to give you a quick update on the latest developments.

Yes or No?

The stimulus plan moved through the House of Representatives on Wednesday of this past week, where reps voted to raise the amount of unsubsidized federal loans available to undergraduate students. By the House’s vote, the availability of these Stafford loans would increase by $2,000 per year of school (or, up to a total of $8,000 over four years).

The Senate’s version of the bill, however, does not provide for any increase in Stafford loan availability–it leaves the numbers right where they are (see the Annual Loan Limits table at Finaid.org for a detailed description of yearly loan allowances). On the other hand, it provides more funds for the Pell Grant and Perkins loan, both of which are targeted at lower-income students.

Growing Opportunity or Growing Concern?

According to the Chronicle of Higher Education, most national higher education groups are hoping for an increase in federal loan availability, believing it will both increase student ability to afford school and decrease the need for riskier private loans–but not everyone feels that way. Opposing voices share the concern that more student loan availability will only lead to greater student debt, in a time when even mTV is concerned with how much students are borrowing !

Loans Come Last

You may know by now that I recommend you to consider loans of any kind as your “last resort” when paying for college.  As I work with families to help them pay for college most efficiently, the personal “road map” I create for them will always attempt to minimize parent and student debt by reducing the overall cost of college with both traditional and non-traditional cost-cutting strategies.  You might be surprised to learn how “thinking outside the box” may put you in a position where you can say “no” to using loans to pay for college.

I encourage you research all your options in this increasingly troubled economic environment. With some pre-planning, the cost of your child’s education doesn’t have to break the bank.  And don’t worry, I’ll continue to keep you posted on the latest news about how the stimulus bill may affect you and your college student!

All the best,
Deborah Fox

photo: Three Sad by ba1969