Education legislation could mean changes for student loans

The Republican Party has called for education reform and a restructuring in the way student loans are handled.

The party's platform would end the current student loan program, which is handled directly by the federal government. Instead, it would give federal money to private lenders to issue directly to students.

"The federal government should not be in the business of originating student loans; however, it should serve as an insurance guarantor for the private sector as they offer loans to students," the platform states. "Private sector participation in student financing should be welcomed."

While students can currently still receive private student loans from banks and other lenders, private loans may be seen as riskier, because they often require a cosigner, have flexible interest rates and strict repayment terms. However, some students find taking on private loans necessary after they've maximized their federal loan limit, because tuition has become so expensive.

The cost of college has skyrocketed in recent years, making it impossible for some students to afford a higher education without student loans. Many students worry about the possibility of not being able to pay their loans back, and some drop out of school completely to avoid additional debt. A decrease in students means universities often raise their costs to cover lost revenue, making tuition rates even less affordable for many students.

Private universities recognize the need to attract students in order to boost revenue. Some of these schools are freezing tuition for the years a student is enrolled, so they won't enroll for a year or two and then suddenly face an exorbitant tuition increase. Many schools are dropping tuition rates, hoping that their low costs will attract more pupils than they are losing.

An increasing number of institutions are developing three-year undergraduate programs, so students can finish their degree faster and pay for fewer semesters in school.

While some schools are trying to increase revenue and balance their budgets by reducing tuition costs and enrolling more students, others are taking a different approach. Staff cuts and fewer pay increases have become more common, while some schools save big by making their processes more efficient and streamlining their suppliers. As universities continue to endure financial hurdles, the need for procurement best practices becomes even more pressing.