The response to the Debt Ceiling Deal, passed today, seems to be short of a collective sigh of relief. While most are happy that the country will not go into default, no one seems completely happy with the outcome, and even fewer Americans are satisfied with the process.
All of that aside, one outcome of this bill is to cut subsidies for graduate student loans. As of July 1, 2012 federal loans (yes, including the Stafford and the Perkins) will accrue interest while the student is in school. Currently, these loans don't start accruing interesting until after graduation. The motivation behind this cut? To ensure funding for Pell Grants (up to $5,500 per year in grant money) which are awarded to America's lowest income students.
Pell Grants are considered an important tool in creating access to higher education for poorer students. As students of Community Psychology, promotion of the Pell Grant is in our blood. As graduate students, we are struggling to get by financially as it is. This bill has the potential to be a barrier to us, financially, in our studies (see some calculations here).
What do you think? Was this the "right" thing to do? How will these changes affect you? Any new strategies needed for financially surviving graduate school?
Does anyone know if this applies to new loans, borrowed after July, 2012? Or all loans, including those we already have? From what I understand, if a fourth year graduate student has accrued 40,000 in debt, he or she will now be paying monthly interest on that while they are in school. At 5% interest, that's around $180 to $200 a month. Seems very steep. Also, how would the average student pay this interest, with student loan money?
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