This study examined effects of increased availability of undergraduate student loan funds under the Higher Education Act Amendments of 1992. It studied the effects of price variables and accumulated debt on student persistence decisions using data from the National Student Postsecondary Aid 1992-93 and 1995-96 Surveys. For two-year college students, increases in grants and loans significantly decreased the effect of tuition increases on student persistence. The effect of debt on two-year college students was significantly and negatively associated with persistence at low levels of debt and, unexpectedly, was significantly and positively associated with persistence for high levels of debt. For four-year students, all levels of debt were negatively associated with persistence. Implications for federal financial aid policy are drawn. These include: (1) students with limited incomes who choose income-contingent repayment plans should have a limit of 10 years for repayment; (2) graduates should be able to repay their student loans through flexible benefit plans; (3) the federal government should set different reimbursement rates for different types of institutions, with Pell Grants as the basis of federal financial aid; and (4) state grants should be the base of the students' aid packages. (Contains 58 references.) (DB)