A coalition of college lobbyists and student-loan industry officials is expected to unveil today a set of proposals that the group says will bolster the federal student-loan programs.

The top priority of the group, known as the Coalition for Better Student Loans, is to push Congress to increase the limits on what students can borrow from the government's loan programs. The group also wants to curb the growth of a federal program that allows borrowers to refinance their debt by making the program less attractive to consumers. The group says that federal money would be better spent on aid for current and future students than on helping those who have already graduated.

According to coalition members, this is the first time that college groups and lenders have joined forces to offer a common set of legislative proposals. Over the past decade, college lobbyists have often been at odds with the loan industry, particularly when they felt that the lenders were advocating policy changes that would make loans more costly to students.

But with Congress now working on legislation to extend the Higher Education Act, the law that governs most federal student-aid programs, the college groups and lenders have found themselves seeing eye-to-eye on several major policy proposals.

"The view of both the associations that participated in this and the student-loan industry is that we want students to have access to loans with the best possible terms and conditions to meet their needs," said Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education.

Student advocates, however, were less than thrilled with the coalition and its proposals. The United States Student Association is opposed to efforts to raise the loan limits and to scale back the loan consolidation program.

"If college groups believe that students' interests are best served by working with the lending community, rather than with the associations that represent students, then they are mistaken," said Mary Cunningham, legislative director for the student association.

For many colleges, raising the limits on federal student loans is the most important student-aid issue in the work to renew the Higher Education Act. The current ceiling on what students can borrow from the government -- $2,625 for a first-year student, $3,500 for sophomores, and $23,000 over an undergraduate career -- was set more than a decade ago and lags far behind today's levels of student need, many college officials say (The Chronicle, January 24).

Under the coalition's proposal, the overall borrowing limit for undergraduates would be increased to $30,000. Freshmen would be able to borrow up to $4,000, and sophomores would be able to borrow up to $6,000. After that, borrowers would receive "flexible borrowing accounts" of up to $20,000, to be used as needed throughout the remainder of their college years. Students would not, however, be able to borrow more than $10,000 in any one year.

Two major college groups -- the American Association of Community Colleges and the American Association of State Colleges and Universities -- have opposed an increase in the overall borrowing limit. To deal with these groups' concerns, the coalition's proposal would allow colleges that want to keep the current loan limits in place to do so. In addition, colleges would be able to set lower limits for entire groups of students, such as first-year students, who tend to be at the greatest risk of dropping out.

To help finance its loan-limit proposal, the coalition is calling on lawmakers to make the federal loan-consolidation program a less attractive option for borrowers. Members of the coalition say that loan consolidation costs the government billions of dollars in subsidies each year to keep the costs of the loans cheaper for borrowers. That money, they say, would be better spent helping current and future students, rather than helping former students to repay their loans (The Chronicle, January 10).

Under the coalition's proposals, borrowers would no longer be able to lock in fixed interest rates for up to 30 years, as they can now. Instead, borrowers with consolidated loans would be charged the same rate as all other federal student-loan borrowers are charged in a given year. Currently, the rate varies from year to year, based on market conditions.

In addition, the coalition would offer consolidation as an option only to those borrowers who had multiple student loans from different lenders, or to those who could demonstrate that they would have trouble repaying their debt without consolidating. Currently, there are few restrictions on which borrowers can refinance their loans.

"Targeted assistance ought to be provided to borrowers who have problems when they leave school," says Mr. Hartle. "But not all borrowers need additional subsidies after leaving school."

The coalition is also asking lawmakers to:

Eliminate, or at least incrementally reduce, the origination fees that borrowers must pay to obtain their student loans.

Improve repayment options for borrowers who are struggling to repay their debt. Currently, most borrowers repay their loans within 10 years. One possible option would be to allow borrowers to repay only the interest on their loans during their first two years in repayment. After that time had passed, borrowers could decide whether they wanted to repay their loans in 10 years, or whether they wanted to enter an extended repayment plan.

Provide $1-billion for the government to provide greater forgiveness of student-loan debt for borrowers who "enter lower-paying, high need career fields such as teaching in low-income areas."
The members of the coalition include the American Council on Education, the Association of American Universities, College Parents of America, the Consumer Bankers Association, the Education Finance Council, the National Association of Independent Colleges and Universities, the National Association of State Universities and Land-Grant Colleges, the National Association of Student Financial Aid Administrators, the National Council of Higher Education Loan Programs, and Sallie Mae.