I’ve posted before that premeds in college should try to keep college debt as low as possible as med school is crazy expensive and paid for by borrowing which needs to be paid back. At least currently there’s a cap on borrowing costs. If med students (or other grad students) have to turn to private sector where borrowing costs/terms will become the wild west, I think prohibitive is a better way to describe cost of med school than just “merely” crazy expensive. Will med (or other grad) student borrowers ever get out of debt, or will kindly paternal lenders just “generously” continue to modify terms essentially creating a lifetime class of indentured servants. Will more parents financial situations be at risk as they have to cosign loans. It just seems that this legislation is another daily attempt by the pigs at the trough in DC (in this case financial sector) that have no problem getting legislators to do their bidding.
Like so many things, this is targeting the wrong people. What this will do is put medical school, law school, grad school out of reach for students who’s families aren’t fairly wealthy. Or whose families aren’t willing or able to put themselves in financial peril if they aren’t high earners.
Just like an earlier proposal that was going to tax grad tuition scholarships, or eliminate teacher supplies deductions this likely will either not happen or be changed.
Maybe grad plus won’t be available for just any grad degree, because too many of those are in default or in severe Income Based Repayment. But I really doubt that grad plus won’t be available for MD, PA, Dental, and NP programs. Law school may be in jeopardy likely because too many graduate with very high debt yet aren’t earning much for a very long time.
For the other degrees (ones that don’t pay well), they may have to turn to Discover, Wells Fargo, etc, which offer Student Loans at competitive rates. The difference is that those don’t have IBR…which will make people pause before taking out those loans…something that is NOT happening to people who rack up fed grad plus loans knowing that they can IBR later…which costs all of us. The current system encourages irresponsible debt.
Parent Plus also encourages irresponsible debt because it does not look at income and the “credit check” is extremely minimal…does not look at credit score…and leads to parents feeling pressure to take on hundreds of thousands of dollars in loans that there is no way for them to repay.
I don’t think it is politically sound by offering fed loans only to certain profession by prejudging the out come of the graduate study. Grad plus loans should either stay as is, being totally eliminated or put more conditions/restrictions to IBR, perhaps somewhere in between of a private bank loan and IBR.
The Parent Plus loan should have financial due-diligence factored in, so they won’t make loans to parents that will have difficulty to repay.
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don’t think it is politically sound by offering fed loans only to certain profession by prejudging the out come of the graduate study.
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There would still be about $100k in fed direct loans available for grad students…$138k aggregate for undergrad and grad. These are different from grad plus loans.
Tuition and fees at our state medical schools is around $170,000 for 4 years. This does not include food, rent, utilities, and other living expenses for 4 years, which even if you are frugal will add about $60,000+. We help as much as we can, but that is certainly beyond our means. Students do pause (at least mine does, she actually periodically panics) about borrowing large amounts but what choice does a student who doesn’t come from a wealthy family have? Just not go? Students are being berated for irresponsible student debt, when I think more emphasis should be applied to reducing the cost of graduate education.
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I really don’t think fed grad plus loans for med school will go away. But if they do, the students will use the 100k in direct fed loans available and then turn to Wells Fargo student loans or Discover student loans or another for the rest.
Maybe having fewer loans available will make colleges figure out how to educate for less dollars.
Grad Plus loans for everyone will disappear, including for medical students. Med students who need more than $28/year will be forced into the private loan market–which offers fewer borrower protections and fewer options for loan repayment. I can also foresee private lenders demanding that private student loans become non-dischargable just like federal student loans are now.
Maybe the cost of undergraduate education can be reduced, but the costs of medical education are very inflexible and do not respond to the economies of scale. It costs about $90K per year to educate a single medical student. (Last year for data was 2006 so I expect it costs more now.) Med schools that are heavily endowed (Harvard, Stanford, UMichigan, etc) or public schools that receive large state subsidies may be able to afford to offer tuition discounts to their students, but less well endowed private schools and most public state schools simply cannot.
I’d think taking away grad plus with $28k/yr cap will impact Law school or MBA school much more than med school since med school students are the only group that has “almost guarantee” jobs that come with high enough salary to pay back student loan. Pretty much any grad degree (exclude PhD) without good employment prospect will take a big hit because of this change. But private loan industry will be the only one benefit from this.