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The debt deal, reassuring as it may have been after such a long process, won’t be very good to college students.
According to an article by Candice Choi in the Chicago Sun-Times, political compromises made by both parties in order to reach an agreement to raise the debt ceiling mean that several federal college financing programs are in trouble.
Beginning a year from now graduate students won’t be eligible for subsidized federal loans. Forcing them to finance their educations with unsubsidized private loans could, according to the article, increase average graduate student debt by 16 percent.
Students also won’t receive discounts for making on-time payments on their student loans. The total financial impact of this particular change is unclear, since the discounts depend on when the loan was issued. But for a loan made last year, for instance, graduates get a .5 percent discount for making the payments on time. And now they won’t
In addition, the super committee of a dozen lawmakers may implement tax reforms to reduce the tax benefits families can claim as part of college savings.
These compromises, like so many of others reached in order to prevent Republicans from forcing a catastrophic national default on the country, were clearly not of the Obama administration’s choosing. Duly noted.
But two years ago Obama set a goal to make it so that the United States would have the highest proportion of college graduates in the world by 2020. These new financial burdens on students and their families sort of look like the regulatory changes one would implement in order to get fewer people to go to college.
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AG on August 05, 2011 2:39 PM:
Thank goodness for sweet, sweet, Income-Based Repayment plans.
retr2327 on August 05, 2011 6:03 PM:
The article states that "Starting next July, graduate and professional students will no longer be eligible for subsidized federal loans. These loans keep the cost of borrowing in check because the government doesn’t charge interest while students are in school." But the article doesn't say that the Gov't is doing away with federal loans entirely for such students, and making them obtain "private" loans, as you state. So it could be that federal loans will still be available, but the interest will be running while the student is still in school. [it's my understanding that under current law, a grad student can borrow up to 8K per yr. with no interest while in school, and another 12K with interest running]
Any clarification on this available?