The federal government subsidizes some loans to college students. Typically, the more students who participate in these programs and the more they borrow, the higher the cost to the federal government.
In 2011, President Barack Obama convinced Congress to pass these changes to the federal student loan programs:
(1) Payments were capped at 10 percent of a borrower's discretionary income;
(2) any unpaid balances for people working for the government or in the non-profit sector were forgiven after 10 years; and
(3) people working in the private sector had their loans forgiven after 20 years.
Sources: Allesandra Lanza, "What Obama's 2016 Budget Proposal Means for Student Borrowers,"
usnews.com, February 11, 2015; and Josh Mitchell, "Student-Debt Forgiveness Plans Skyrocket, Raising Fears Over Costs, Higher Tuition," Wall Street Journal, April 22, 2014.
As a result of these changes in the federal student loan program, you would predict that the total amount students' borrowed under these programs would have
A. not changed because many people do not want to work for the government.
B. not changed because people already have loans.
C. increased because the terms of repayment have been made more generous.
D. decreased because people may be worried about their ability to repay.
