<p>I know that Grad and professional students are no longer eligible to receive subsidized loans, but do subsidized loans the student already received as an undergrad continue to be subsidized during grad school? I looked at the wording of the act that discontinued subsidized loans for grad students and it does not seem to have anything that says the subsidy on existing sub loans will be discontinued. </p>
<p>After much procrastination and talking to an adviser in the area she minored in (which she discovered late and has come to love much more than her major), my daughter is leaning toward grad school and we are trying to figure out if her existing loans will start accumulating interest while she is in grad school.</p>
<p>Our son’s undergrad subsidized loans (taken by him from 2004-2009) were put into deferral when he was in grad school from fall 2009- May 2011. It did take a few emails/calls from him to make it happen but there was no interest accumulated.</p>
<p>Don’t know if there has been a change more recently.</p>
<p>There has been a change in the law as far as grad students *receiving *subsidized loans. From July 2012 they grad students are no longer eligible for the subsidized loans. The thing I am not sure of is if the act passed in 2011 that disallows subsidized graduate student loans also affects the interest on subsidized loans the student took out as an undergrad. </p>
<p>When I google it i get tons of hits about the fact that grad students can no longer get subsidized loans, but can never find any information about subsidized loans they already have from their undergrad days. Reading the act, it does not seem to say anything about losing the subsidy on existing loans while in Grad school. But reading those acts (for me) to miss things because they are so long winded.</p>
<p>It wont make a difference about whether or not she goes to grad school, but it would be nice to know and not get any surprises. We would probably pay the interest rather than have it accumulate for 2 years.</p>
<p>No, they don’t. Subsidized loans have their interest paid by the government whenever they are in in-school status or deferment, and that includes graduate school status. I am currently in graduate school and I have subsidized loans that I borrowed in graduate school before the law was passed, and they did not convert to unsubsidized loans - the government is still paying the interest.</p>
<p>DD is in the Peace Corps. Her subsidized loans are not accruing interest while she serves. I don’t believe they will accrue interest if she enrolls in grad school either.</p>
<p>DS1 subsidized loans remained subsidized in Peace Corps and now that he’s in grad school remain subsidized.
However, DS3’s financial aid package stated that new rules for subsidized loans taken after June 2012, that interest begins accruing immediately that the student is not enrolled at least half time. I take it to mean that immediately after graduation, interest begins accruing. As an extension, if grad students can’t take out subsidized loans, then I 'd imagine starting this year, the subsidized loans will no longer be subsidized for grad students? Great question.</p>
<p>That’s what is so confusing. The new law does not go into affect until June 2012. After that date, I know new grad loans will not be subsidized, and that new undergrad sub loans will lose the 6 month interest free grace period. Trying to determine what, if any, change there is to existing loans after June. Logic would say that the existing loans should maintain the same conditions they had when the student signed up for them. But it’s the government, so logic is out the window.</p>
<p>To add another kink to the situation, she may not start till spring as the Prof she will likely do research with has new projects and funding starting then. So her loans will go into repayment then will need to be deferred after a month.</p>
<p>I would hope that whatever the law was when you took out the loan is what would apply. After all, one takes out loans based on certain stipulations, right? I mean, for those students who will be taking out subsidized loans after June this year, they have to think whether or not it’s worth it for them to take the loan. Some people definitely need the loans, some people not so much.</p>
<p>In everything I’ve read on the subject, I haven’t heard of any change in the terms regarding existing undergrad loans, other than the fact that the interest starts accruing sooner after graduation, as stated above.</p>
<p>On another subject, there is little movement by Congress to act regarding subsidized undergrad loans. As a result, the old interest rate goes back into effect - which is 6.8%. That is double the current interest rate. Individual Democratic members of Congress have introduced a bill at the request of the President to stop the interest rate increase, but the bill is not moving forward, and has no chance of success in the US House.</p>
<p>I *think *the interest beginning to accrue right after graduation is also just on new loans issued from June 2012. I think existing sub loans still have the grace period. I hope I think right!! </p>
<p>edited to add - yes, the loss of grace period is for new loans
</p>
<p>Given the general trend the last couple of years, I am not at all surprised that the interest rate jump on loans is not being addressed. 6.8% is quite a high rate given current interest rates. I am glad my kids are through. Happily my daughter and her soon to be husband look like they will receive stipends for grad school that will be enough to live on without loans.</p>