No More Grace Period on Student Loans, Changes for Grad Students

[Sunny324]

Full article here:

http://www.chicagotribune.com/business/breaking/chi-no-more-grace-period-on-student-loans-20120628,0,4384922.story

Summary: The US Senate reached a deal to prevent student loan interest rates from doubling to 6.8% for one year. But it took away 2 federal subsidies to cover the $6 billion expense.

Beginning July 1, students who take out loans through July 2014 will have to start paying interest on their federal loans as soon as they graduate and will no longer have the 6-month grace period.

The other change, effective July 1, affects students pursuing advanced degrees. Students will have to start paying interest on their federal loans while they are enrolled and for 6 months after they graduate.

Graduate students will only have the option to take out unsubsidized loans which will force them to pay interest throughout their schooling.

The changes to graduate students' loan programs are the result of the debt-ceiling deal signed into law last summer.

Does this affect your plans for pursuing a graduate degree? It has certainly given me motivation to save as much as I can to minimize borrowing.

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[Myze]

This worries me. A lot. I'll be taking out an easy 60K on tuition alone, and the thought of having to pay 6.8% interest at the same time I'm taking classes (jobless, even)... I don't know how I'll be able to do that.

What a terrible time to be in college.

 

[Sunny324]

I agree. I did some quick calculations and depending on how much you're borrowing, payments could be in the hundreds-per-month range while in school. Are we just supposed to borrow even more to cover that too? Yikes!

 

[otsomeday]

So from what I understand this doesn't have any effect this year right? Because we are borrowing through 2013 this year.

 

[EastCoastHope]

No, this effects any loan monies distributed after July 1, 2012. Which is today. Which means anyone getting money from this day forward has to pay interest the second we get the money deposited into our accounts at our school.

All I can say is remember to vote this November, where ever your feeling are on the political spectrum. It is our only way to let them know what we think.

 

[Sunny324]

This measure was passed with bi-partisan support in the senate. It was part of a larger highway spending bill called H.R. 4348. The best thing to do right now is contact the senator of your state of residence and tell them that you are unhappy with this change and the rising costs of tuition in general.

Link to list of senators by state

 

[OTlg2]

Is the six month grace period taken away for graduate degrees also? Or is that just referring to undergrad loans?

What an awful time to be in college indeed.

 

[OTlg2]

Ah, never mind I see the article says undergrads lose grace period. Do grad students get a grace period? I guess I always assumed so.

I am starting OT school in August and I want so bad to be excited about moving to another state and starting the program but all I can seem to think about is the student loans and how terrible they are going to be to pay back after graduation!

 

[resot]

We already knew that grad students were no longer going to be receiving subsidized loans as of July. Which means loans will start accruing interest as soon as they are dropped into our accounts at school.


However, I do not think we need to actually make monthly interest payments while in school. I've read over a few articles about the subject. I think the article writers are using the words "pay interest" and "accrue interest" interchangeably even though they do not mean the same thing. Pay interst means we make monthly payments. Accrue interst means the interest gets added to our total amount every month, but we don't need to start paying that until after graduation, unless you want to.

 

[CurlyHairedGirl]

The interest accrues while you are in school, but you don't have to pay it at that point. Not until you get out.

 

[Myze]

The interest accrues while you are in school, but you don't have to pay it at that point. Not until you get out.

Oh, that makes more sense. I don't mind accruing a little interest during grad school. Paying it during grad school is a whole nother matter though.

Thank you for the clarification.