<p>1concernedmama, it’s my understanding that an unsub stafford borrower doesn’t HAVE to repay interest while in school. He just has the option to do so. </p>
<p>I empathize that that’s not much consolation when it puts him in the position of having to choose a job during school or more debt after graduation. I’m sorry he’ll face that dilemma.</p>
<p>Definitely frustrating, I’m planning to enter a pharmacy program in fall of 2012 and I was already nervous about the loans, now it’s a lot more nerve-racking knowing that on top of owing $100,000 when I graduate there will also be even more accrued interest. I had figured out how I was going to pay the unsubsidized portion of interest while in school, but, this adds another big chunk of interest to either let accrue during school or work off during school and risk lower grades. Oh well, kind of figured it would happen</p>
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<p>Source, please?</p>
<p>"Some students will have to start paying off their loans while they’re in school </p>
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<p>This is not a true statement. The students do not have to start paying the loans while they are in school. The interest will accrue, but it does not have to be repaid until 6 months after graduating, leaving school, or dropping below half time.</p>
<p>Those who have followed my posts know that I warned about this two years ago, when I first heard about the discussions regarding doing away with subsidies. My friend who has been in finaid longer than I tells me the discussion has been ongoing for several years, but picked up steam when the economy really took a dive a couple years back.</p>
<p>The amount of subsidized Stafford loans for graduate/professional students is currently (and has for many years been) capped at $8,500 per year. For most graduate students who qualify for loans (qualification is based upon the completed FAFSA form), this is a relatively small percentage of total loans taken. </p>
<p>Most graduate/professional students require a combination of Stafford loans (up to $20,500 per year, total, including both subsidized and unsubsidized Stafford loans) and other funding sources to fund their educations. Interest on all graduate/professional Stafford loans is currently capped at 6.8% percent, which is quite a good rate on an unsecured loan.</p>
<p>I don’t think that this news is earth shattering to those who are seriously considering graduate or professional degrees.</p>
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<p>[nsf.gov</a> - NCSES Characteristics of Doctoral Scientists and Engineers in the United States - US National Science Foundation (NSF)](<a href=“http://nsf.gov/statistics/doctoratework/]nsf.gov”>Characteristics of Scientists and Engineers with U.S. Doctorates | NCSES | NSF)
[nsf.gov</a> - NCSES Graduate Students and Postdoctorates in S&E - US National Science Foundation (NSF)](<a href=“http://nsf.gov/statistics/gradpostdoc/]nsf.gov”>Graduate Students and Postdoctorates in S&E | NCSES | NSF)</p>
<p>Just to be clear… This only affects grad students right???</p>
<p>All of the news that I’ve seen indicate that the subsidized loans for graduate students are going away. I believe that the credit for on-time payments going away (partially?) affects undergrads and grad students.</p>
<p>The amount of government money spent on subsidized loans pale in comparison to that used on Defense, Medicare/Medicaid, and Social Security, which combined, make up more than 80% of GDP. [Government</a> Spending in United States: Federal State Local 2011 - Charts Tables History](<a href=“http://www.usgovernmentspending.com/]Government”>http://www.usgovernmentspending.com/)</p>
<p>What Congress needs to do is refocus attention on these big issues and seek fundamental changes in funding for these programs instead of invoking troubling budget cuts from the remaining <20% of GDP. I know Defense spending is justified and necessary and that amending funding for Social Security, Medicare, and Medicaid could mean political suicide for politicians but this country is gonna deteriorate and borrow itself into a deep hole if it does not start considering massive fundamental changes to these “Great Society” programs.</p>
<p>We have met the low hanging fruit and it is us.</p>
<p>“Interest on all graduate/professional Stafford loans is currently capped at 6.8% percent…”</p>
<p>Grad Plus loans, which are also Stafford, are currently at 7.9% interest. Since the cap on sub and unsub loans is $20,500 per year, I would guess that many grad students have to take grad plus loans as well if they intend to also undertake (probably more) important (for professional development and networking) internships and work for free or practically free while in school. Sure would be great to find meaningful, paid work in one’s intended field while in school, but the reality is most places only want to take on cheap or free interns.</p>
<p>I wouldn’t mind ending subsidized loans for grad students, but it would seem more fair if they would at least lower the interest rate closer to the undergrad rate of 3.4%.</p>
<p>Here’s a thought, why not lower the paychecks of the polititions and leave those who wish to further their education alone. <.<</p>
<p>aww this is very bad</p>
<p>Next school year, there won’t be ANY federal loans with an interest rate of less than 6.8%. Subsidized staffords go up to 6.8%. The Perkins program expires and the colleges are supposed to return all of the money to the Treasury vs. recycling it to new loans. The Obama Administration is proposing to replace the Perkins program with a new 6.8% interest rate program, but that may not happen with the gridlock in DC.</p>
<p>If you have a choice between taking out loans this year or next year, take the maximum amount of Federally subsidized loans out this year.</p>
<p>The ironic thing is the Feds may end up hurting themselves. The Feds make a nice profit on 6.8% loans. But if they are not subsidizing the interest rate while in school, (particuarly for grad and prof. school), the people with better credit will find cheaper ways of borrowing the money. I’d expect more universities will start to offer their own loan programs at lower interest rates for graduate and professional students to keep up their enrollments stable.</p>
<p>That’s the first I have heard about the rate change to Staffords - are we talking about for undergrads?</p>
<p>Never mind - I found the answer.</p>
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<p>Probably not so positive after administrative costs and bad debt are subtracted. However, that is just a guess.</p>
<p>In addition, any profit that the federal government would make is reduced by the number of defaulted loans. </p>
<p>Let’s keep in mind that the 6.8% rate is significantly lower than the rate was in the 1990’s, and it is certainly lower than the rates for unsecured loans generally available through private sources.</p>
<p>Maybe this will lead to more variation in tuition costs for graduate programs within a university. A social work masters should cost less than a MBA. A recent New York Times article said that many universities are making a 20% profit on their law schools.</p>
<p>Some colleges are already varying the prices of their undergrad programs based upon demand, such as charging more for a business major. Also, Penn State charges more for their undergrad nursing program because they say it costs more than most programs.</p>
<p>The default rate on Staffords is quite high.
[Many</a> More Students Are Defaulting Than Official Tallies Show - Government - The Chronicle of Higher Education](<a href=“Many More Students Are Defaulting Than Official Tallies Show”>Many More Students Are Defaulting Than Official Tallies Show)
Back in 1991, there were already growing problems.
[The</a> Experience of the Stafford Loan Program and Options for Change](<a href=“http://www.cbo.gov/doc.cfm?index=6283&type=0]The”>http://www.cbo.gov/doc.cfm?index=6283&type=0)</p>