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PROSPER Act Seeks to Eliminate Graduate PLUS/Subsidized Loans?

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PROSPER Act Seeks to Eliminate Graduate PLUS/Subsidized Loans?  [#permalink]

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New post 12 Apr 2018, 17:33
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I wanted to get GMATClub's opinion on this. A December 2017 article from US News says that the PROSPER Act (proposed by Republicans on the House Committee on Education and the Workforce) is looking to eliminated both subsidized Federal loans and Graduate PLUS loans.

Potential Effects of PROSPER Act on Student Loans
Here's the key excerpts:
One loan, one grant: PROSPER includes the one loan, one grant idea for streamlining federal student aid into a single funding tool.
Policymakers and others have circulated this idea for years as a way to simplify the loan process. The bill proposes eliminating Stafford and PLUS loans for first-time borrowers as of July 1, 2019, and replacing these options with a new Federal ONE Loan.
Borrowers who had borrowed direct loans prior to 2019 could still take them out until Oct. 1, 2024, at which point direct loans would be phased out entirely in favor of ONE Loans.

No subsidized loans or origination fees: Under PROSPER, all loans in the ONE program would be unsubsidized. Additionally, all loan aid would be disbursed weekly or monthly, like a paycheck, rather than the current practice of one disbursement per semester. And all loan origination fees would be eliminated.

Tried to post the link but it looks like I have not been a member for long enough. Google "US News Potential Effects of PROSPER Act on Student Loans" for the article.

I'm concerned from what I'm reading. An MBA at a Top 20 averages $180k. If the PROSPER Act is enacted, this would force students to take out ~$120k in private loans (assuming no scholarship). Feel like this could drastically change the game for those pursuing MBAs (or graduate degrees in general).

What is the reaction from everyone else?
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Re: PROSPER Act Seeks to Eliminate Graduate PLUS/Subsidized Loans?  [#permalink]

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New post 16 Apr 2018, 10:59
Thanks for posting!

I am not sure how many people have relied and used the Federal student loans to finance their MBA. I have used a private loan and I felt it was very affordable without any origination fees but one has to qualify for it, unlike the Federal ones that is available to anyone. I feel for a Top 20 MBA applicant, the federal loan program in the current shape is a poor value and a bad tool. The origination fees make it a pretty bad option in the first place, and the interest rates are not thing to write home about. I feel Private Loans for BSchool were always better. I am not as concerned about it for the MBA applicants since it will impact a very small number of folks (basically only those who had to file for bankruptcy or had some other issues, in which case, they can use a co-signer to mitigate some of these). Let me know if I am off...
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Re: PROSPER Act Seeks to Eliminate Graduate PLUS/Subsidized Loans? &nbs [#permalink] 16 Apr 2018, 10:59
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