As discussions continue about the potential dismantling of the U.S. Department of Education under the new presidential administration, concerns are rising about how such a move could impact student loans and financial aid programs.

Amy Kempe, chief of staff at the Community College of Rhode Island, and Charles Kelley, executive director of the Rhode Island Student Loan Authority, provided insights into what these changes might mean for students and families in Rhode Island.

According to Kempe, CCRI, in partnership with the governor’s office, the Council on Postsecondary Education, and the state’s higher-education institutions, is closely monitoring potential changes to assess their impact on current and prospective students.

“Regardless of any policy changes, CCRI remains committed to ensuring that higher education remains accessible and affordable,” said Kempe. “We encourage students and families to stay proactive, seek guidance from CCRI’s financial aid office, and take advantage of all available resources to make informed financial decisions about their education.”

Kelley noted that while eliminating the Department of Education entirely would be "difficult to achieve," a more likely scenario would involve certain responsibilities being transferred to other parts of the government. But he acknowledged that uncertainty remains about the future structure of federal student aid.

For now, Pell Grants – the need-based financial aid provided to low-income students – do not appear to be facing major changes.

"Maximum Pell Grant is now $7,395," Kelley confirmed.

One of the more significant potential shifts, however, involves federal loans for graduate students and parents.

“The most significant change we have seen is the federal government’s involvement in making loans to graduate students and Parent PLUS loans the parents use to fill the gap after grants and the student maxing out the student direct loan, with a maximum of $5,500 for a traditional freshman,” Kelley explained.

The financial impact of eliminating or reducing these loans could be substantial. According to Kelley, replacing or reducing the so-called Grad PLUS loans would be especially troublesome as graduate students generally do not have the income and credit history to obtain a loan on their own. He highlighted the local implications, stating that about $60 million in Grad PLUS loans were issued in Rhode Island for the 2023-24 academic year alone.

Similarly, Parent PLUS loans – federal loans taken out by parents to help cover college costs  – play a significant role in financing higher education.

“There were $103 million in Parent PLUS loans made for the 2023-24 academic year in Rhode Island. If those are eliminated or curtailed, RISLA will need to step up and help fill that gap,” Kelley said.

For students seeking additional financial aid, Kelley pointed to other scholarship opportunities, emphasizing the importance of applying for local funding.

“Go to the College Board for national scholarships and RIScholarship.org to find and apply for local scholarships. You generally have a much better chance of being awarded a local scholarship, even if they are relatively small,” he advised.

Beyond the discussion of potential policy changes, Kelley acknowledged the growing national concern over student loan debt, which now totals about $1.6 trillion. He noted that this massive loan portfolio makes the Department of Education “one of the largest banks in the country,” which has led to discussions about moving student loan management to the U.S. Treasury. However, he added, “they may not want it.”

As students and families navigate this evolving landscape, Kelley encouraged them to make informed financial decisions to minimize their reliance on loans.

“I understand it is unpopular to suggest this, but students and families should seriously consider making difficult choices to reduce the amount of debt they must incur,” he said. “Many students go on to graduate school and should not overload themselves with debt for their undergraduate” degree.

While the future of federal student loans remains uncertain, RISLA and other state-based loan providers may play a crucial role in filling potential funding gaps. For students and families planning for college, Kempe and Kelley say staying up to date and exploring alternative funding sources will be key in the months ahead.

“While no changes have been made yet, it is critically important for borrowers to stay informed, maintain communication with their loan servicer provider, and families planning for college financing should file their FAFSA to apply for aid as early as possible,” said Kempe.