Deficit Reduction Plan Calls for Changes to Loans

The latest deficit-reduction plan from the two men who led President Obama's deficit reduction committee in 2010 calls for changes to several programs important to higher education. The plan, released Friday by former Senator Alan Simpson, a Republican, and Erskine Bowles, a Democrat, would eliminate the in-school interest subsidy on student loans, end PLUS loans to graduate students, use a market-based interest rate for all student loans, and create a "two-tier" system of income-based repayment. The plan, which is unlikely to be passed in its current form, does not call for significant cuts to the Pell Grant.