The federal government doesn’t allow college students to borrow money, but the Obama administration is expanding that restriction to help students afford a college education.
The policy change, announced Monday by Education Secretary Arne Duncan, allows borrowers to use the money they earn to pay for private tuition.
The change will be available to borrowers who take out student loans or have them discharged, according to the administration.
Students who receive federal aid, including Pell grants and scholarships, can also use that money to pay private school tuition.
But the rules do not apply to federal loans, so borrowers who have them can still take out loans to cover private tuition, the administration said.
Student loan debt is at record highs, but many borrowers have struggled to repay their loans.
The Obama administration wants to help people like Stephanie Pacheco, who borrowed $35,000 in federal loans for college.
Pacheco is studying business at University of Washington and is hoping to earn a degree and work toward her master’s degree.
She is paying $45,000 to attend the school in Seattle, but she still has a loan from the U.S. Department of Education, which has not forgiven her loans.
She has not been able to repay the loans and cannot use her federal loans to pay tuition.