Starting July 2012, say goodbye to subsidized grad federal direct loans

[Pharmasaurus88]

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As part of the debt ceiling agreement they will be removing subsidization of federal direct loans while in school for grad student loans distributed after next July. So here's to another $8500 we'll be paying interest on while in school. Here's the link to the article http://money.cnn.com/2011/08/01/news/economy/debt_ceiling_students/index.htm

 

[PharmyC]

I have to say that few things political get me stirring. But one issue I remain adamant about is education. More specifically, funding for education should never take cuts in my opinon. And lucky me, this'll be instated the year I enter pharmacy school (assuming I get in).

Does anyone know the typical interest rate on graduate loans? It's around 6% - 7% correct? And they use to subsidize $8500?

Edit:

If that is correct, then the amount of extra debt accrued in those four years really is a drop in the bucket. Still sucks, but it really is not so bad. The government might actually be making a smart move. A little bit of money spent on a lot of people adds up quickly. This really won't add TOO much to the burden of loans most pharmacy or med students rack up already. It does suck more for liberal artsy PhD programs. Not so much for research based PhDs since most of those are payed for by the school you are attending via your work and research.

 

[Pharmasaurus88]

I have to say that few things political get me stirring. But one issue I remain adamant about is education. More specifically, funding for education should never take cuts in my opinon. And lucky me, this'll be instated the year I enter pharmacy school (assuming I get in).

Does anyone know the typical interest rate on graduate loans? It's around 6% - 7% correct? And they use to subsidize $8500?

Edit:

If that is correct, then the amount of extra debt accrued in those four years really is a drop in the bucket. Still sucks, but it really is not so bad. The government might actually be making a smart move. A little bit of money spent on a lot of people adds up quickly. This really won't add TOO much to the burden of loans most pharmacy or med students rack up already. It does suck more for liberal artsy PhD programs. Not so much for research based PhDs since most of those are payed for by the school you are attending via your work and research.

While it's true that the amount added on might be very little compared to the entirety of the loan, money is still money. Also, once you say "it's not so bad" it lets leaders in govt know that they won't be hurt too much politically by screwing over students, even if it's by a little, and so they will continue to do it.

 

[Notecard]

A drop in the bucket? Is that a joke lol? 82k in unsubsized loans is much different than 48k unsub and 34k subsidized. You really need to look at things a bit more closely if you think this isn't a big deal.

It makes me sad really. I knew this might happen but optimistically I was looking at around 20k in unsub loans when I graduate. Oh well, I guess it just means living like I am now for two years longer than expected.

 

[owlegrad]

I have to say that few things political get me stirring. But one issue I remain adamant about is education. More specifically, funding for education should never take cuts in my opinon. And lucky me, this'll be instated the year I enter pharmacy school (assuming I get in).

Does anyone know the typical interest rate on graduate loans? It's around 6% - 7% correct? And they use to subsidize $8500?

Edit:

If that is correct, then the amount of extra debt accrued in those four years really is a drop in the bucket. Still sucks, but it really is not so bad. The government might actually be making a smart move. A little bit of money spent on a lot of people adds up quickly. This really won't add TOO much to the burden of loans most pharmacy or med students rack up already. It does suck more for liberal artsy PhD programs. Not so much for research based PhDs since most of those are payed for by the school you are attending via your work and research.

Grad+ rate is currently 7.9. I am assuming that the difference will be met by Grad+ loans.

While it's true that the amount added on might be very little compared to the entirety of the loan, money is still money. Also, once you say "it's not so bad" it lets leaders in govt know that they won't be hurt too much politically by screwing over students, even if it's by a little, and so they will continue to do it.

I agree with this line of thinking very adamantly. Right now it is eliminating the Direct loans. What next? Interest rate creeping up? This is bad, bad, bad. It is a terrible precedent. Surely people don't think it is grad students who are causing this countries financial woes? And the easier we roll over on this, the easier the next cut will come. We should be rioting in the streets over this (or at least writing our representatives). My only condolence is it will only effect me in my last year of school. Of course July 2012 is still pretty far away, plenty can happen between now and then.

 

[Pharmasaurus88]

Grad+ rate is currently 7.9. I am assuming that the difference will be met by Grad+ loans.

I think they'll just let to borrow the $8500 that used to be subsidized at the unsubsidized rate of 6.8%. So for me instead of 8.5k sub and 20.5k unsub, it will just be 33k unsub next year.

 

[Judgment Dragon]

Grad+ rate is currently 7.9. I am assuming that the difference will be met by Grad+ loans.



I agree with this line of thinking very adamantly. Right now it is eliminating the Direct loans. What next? Interest rate creeping up? This is bad, bad, bad. It is a terrible precedent. Surely people don't think it is grad students who are causing this countries financial woes? And the easier we roll over on this, the easier the next cut will come. We should be rioting in the streets over this (or at least writing our representatives). My only condolence is it will only effect me in my last year of school. Of course July 2012 is still pretty far away, plenty can happen between now and then.

This is only for Subsidized Graduate Loans though right (the thing being cut)?

 

[owlegrad]

I think they'll just let to borrow the $8500 that used to be subsidized at the unsubsidized rate of 6.8%. So for me instead of 8.5k sub and 20.5k unsub, it will just be 33k unsub next year.

I think you are being overly optimistic. I hope for all our sakes you are correct.

This is only for Subsidized Graduate Loans though right (the thing being cut)?

Yes, "only" the subsidized loans are being cut (for grad students).

 

[Project2015]

Why isn't it just conversion from sub to unsub? The only government expenditure is the subsidization of the interest, from what I can tell. Without that, they can only gain from the interests paid by students.

 

[PharmyC]

Don't get me wrong. I DO adamantly disagree with any cuts to educational funding. And I AM upset about the rise in cost this will cause. I was just providing a rational view on the other side of the argument.

It's easy to villainize politicians whenever they make a decision that you disagree with. And while I DO believe they could have EASILY chosen to cut funds from a much less worthy government funded project, it is what it is. In addition, the "slippery slope" argument has very little hold in my opinion. It is the same argument socially conservative people use to prevent legalization of gay-marriage. You can't argue on "what-ifs" and hyperbole.

The situation sucks. For all of us. And to be honest it has me a bit worried. With pharmacy as a career already surrounded by that infamous "doom-and-gloom" aura, I'd hate to graduate with even more loans (due to an addition 34,000 accruing interest now) and not find a job. I have this odd nature of arguing for the other side even if I don't agree with it... really get's in the way of making decisions.

And who knows? Maybe if it becomes harder for students to get subsidized, cheap loans - universities will be forced to lower already inflated costs? I can dream can't I?

 

[TTPSomething]

And who knows? Maybe if it becomes harder for students to get subsidized, cheap loans - universities will be forced to lower already inflated costs? I can dream can't I?

I think universities would argue they aren't inflated costs. They have consistently been getting less and less from the state governments to help offset the cost of running a school.

The problem is the paradigm regarding who should pay for education is shifting/has shifted. We seem to want whoever benefits from the education to pay for that education. At one time this country felt well educated population was good for the country, and hence, the government helped offset the cost of it. When corporations were thought to be who benefited, corporations helped offset the cost. Apparently now we think that only the individual benefits from a higher education, and we have slowly been shifting the costs of that education to the individual.

As an aside, I would like to see universities quit building big, fancy buildings with tons of wasted space. Look around at the newer building on a campus and really think about how space is being used. Do we really need a fancy looking atrium, that we often need to cool and heat to be able to provide a decent education?

 

[xtsukiyox]

The problem is the paradigm regarding who should pay for education is shifting/has shifted. We seem to want whoever benefits from the education to pay for that education. At one time this country felt well educated population was good for the country, and hence, the government helped offset the cost of it. When corporations were thought to be who benefited, corporations helped offset the cost. Apparently now we think that only the individual benefits from a higher education, and we have slowly been shifting the costs of that education to the individual.

TTPSomething, I thought this was very well put. I hadn't put it together quite that way before, but I think you've summed it up. What you've outlined is a trend overall: education, healthcare, retirement, housing, the list goes on. Rather than accept as a country that we believe the American dream includes a shot at a better standard of living including reasonable education, healthcare, etc, to put it simply, people are trying to profit individually and companies are cutting for the bottom line. The trend existed before but were certainly exacerbated by the economic woes. You've got your finger on something much bigger here.

 

[AmyChaser]

Short-sighted solutions have failed to take the longer view and see graduate studies have the potential for high ROI, not just for the individual but for American society as a whole. It's a shame. Education should be seen as an investment- instead it's often considered as welfare.

 

[WhiteSnows]

I think you are being overly optimistic. I hope for all our sakes you are correct.

I also hope you are correct.

 

[Trent Steele]

Trust me it may seem like a drop in the bucket, but when you actually graduate and start having to pay back that huge monthly bill, you will see. In state public schools are the only way you should consider a professional degree at this point.

I have to say that few things political get me stirring. But one issue I remain adamant about is education. More specifically, funding for education should never take cuts in my opinon. And lucky me, this'll be instated the year I enter pharmacy school (assuming I get in).

Does anyone know the typical interest rate on graduate loans? It's around 6% - 7% correct? And they use to subsidize $8500?

Edit:

If that is correct, then the amount of extra debt accrued in those four years really is a drop in the bucket. Still sucks, but it really is not so bad. The government might actually be making a smart move. A little bit of money spent on a lot of people adds up quickly. This really won't add TOO much to the burden of loans most pharmacy or med students rack up already. It does suck more for liberal artsy PhD programs. Not so much for research based PhDs since most of those are payed for by the school you are attending via your work and research.

 

[confettiflyer]

Raise your hand if 6.8% interest capitalizing on $8,500/yr x 4 years will affect your ultimate decision to enter pharmacy, medical, dental, or optometry school. Figured as much.

Gov't was smart here, they took away a benefit to a set of people who would have acted the same way had that incentive not been there in the first place. In addition, this set of people does not vote with the same ferocity as our old fart family members.

 

[Swishers]

Raise your hand if 6.8% interest capitalizing on $8,500/yr x 4 years will affect your ultimate decision to enter pharmacy, medical, dental, or optometry school. Figured as much.

Gov't was smart here, they took away a benefit to a set of people who would have acted the same way had that incentive not been there in the first place. In addition, this set of people does not vote with the same ferocity as our old fart family members.

They could jack the interest rate up to 9% and I would likely still deal it. GUb'ment, take mah money!

 

[WhiteSnows]

Thank you Government to teach american a lesson: Do not rely on others other than yourself.

 

[owlegrad]

Raise your hand if 6.8% interest capitalizing on $8,500/yr x 4 years will affect your ultimate decision to enter pharmacy, medical, dental, or optometry school. Figured as much.

Gov't was smart here, they took away a benefit to a set of people who would have acted the same way had that incentive not been there in the first place. In addition, this set of people does not vote with the same ferocity as our old fart family members.

You hush.

Let's face it, in the grand scheme of things this is minor. At least we still have loans. Plus it only affects me in my final year. But that does not oblige me to like it or see it from a rational POV. They tuck r cheap loans magamit!

Thank you Government to teach american a lesson: Do not rely on others other than yourself.

So you paid out of pocket for pharmacy school then?

 

[owlegrad]

Why isn't it just conversion from sub to unsub? The only government expenditure is the subsidization of the interest, from what I can tell. Without that, they can only gain from the interests paid by students.

There is no language in the bill that would raise the current cap on unsubsidized loans. The difference will almost certainly be met with Grad+ or private loans.

 

[R2pharmD2]

There is no language in the bill that would raise the current cap on unsubsidized loans. The difference will almost certainly be met with Grad+ or private loans.

Actually...

7 ‘‘(ii) the maximum annual amount of
8 Federal Direct Unsubsidized Stafford
9 loans such a student may borrow in any
10 academic year (as defined in section
11 481(a)(2)) or its equivalent shall be the
12 maximum annual amount for such student
13 determined under section 428H, plus an
14 amount equal to the amount of Federal
15 Direct Stafford loans the student would
16 have received in the absence of this sub-
17 paragraph."

I think that means they're just replacing the subsidized Stafford loans with an equal amount of unsubsidized Stafford loans. Someone correct me if I'm wrong so I can be a bit more depressed over how much extra I'm going to owe back in loans.

 

[owlegrad]

Actually...

7 ‘‘(ii) the maximum annual amount of
8 Federal Direct Unsubsidized Stafford
9 loans such a student may borrow in any
10 academic year (as defined in section
11 481(a)(2)) or its equivalent shall be the
12 maximum annual amount for such student
13 determined under section 428H, plus an
14 amount equal to the amount of Federal
15 Direct Stafford loans the student would
16 have received in the absence of this sub-
17 paragraph."

I think that means they're just replacing the subsidized Stafford loans with an equal amount of unsubsidized Stafford loans. Someone correct me if I'm wrong so I can be a bit more depressed over how much extra I'm going to owe back in loans.

Hmmmm.....Well played sir.

 

[WhiteSnows]

You hush.

Let's face it, in the grand scheme of things this is minor. At least we still have loans. Plus it only affects me in my final year. But that does not oblige me to like it or see it from a rational POV. They tuck r cheap loans magamit!




So you paid out of pocket for pharmacy school then?

My point is not that we should not borrow money for school, but we should use it wisely. Unwisely use of student loan such as be on the cruise, buy a new car, spending on vacation, or shopping.

Yes, that is what a group of my friends do.

 

[confettiflyer]

Thank you Government to teach american a lesson: Do not rely on others other than yourself.

My point is not that we should not borrow money for school, but we should use it wisely. Unwisely use of student loan such as be on the cruise, buy a new car, spending on vacation, or shopping.

Yes, that is what a group of my friends do.

what the hell, hahahha

 

[owlegrad]

what the hell, hahahha

Look, "Do not rely on others other than yourself" clearly means "My point is not that we should not borrow money for school, but we should use it wisely. Unwisely use of student loan such as be on the cruise, buy a new car, spending on vacation, or shopping."

It couldn't be any simpler.

 

[WhiteSnows]

Look, "Do not rely on others other than yourself" clearly means "My point is not that we should not borrow money for school, but we should use it wisely. Unwisely use of student loan such as be on the cruise, buy a new car, spending on vacation, or shopping."

It couldn't be any simpler.

That is the mentality of people in my school. They think they are ok because all they have to do is take out more on student loan. They feel peace because there is nothing worry about until after graduation. Thanks to US debt crisis, wake people up to the reality of DEBT...

 

[DelawareStudent]

That's fantastic. They've already cut my GI Bill benefits - meaning my school went from fully paid for, to costing me a lot of money - and now this. Don't forget to thank your parents for helping us get here 😉.

 

[xtsukiyox]

Gov't was smart here, they took away a benefit to a set of people who would have acted the same way had that incentive not been there in the first place. In addition, this set of people does not vote with the same ferocity as our old fart family members.

This is completely, sadly, true. "Save" money in the short term and no negative side-effects because we don't vote? Sounds like a compromise everyone can get behind. The "active" constituency (older-than-most-of-us voting population) can vote themselves bread and circuses if we don't do anything.

RIOT IN THE STREETS!!

 

[Jabberwocky12]

I think that the slippery slope fallacy is going to take place a lot, with the idea of "they took this, so what's next?" just like how people think "if we legalize this or that imagine what ELSE will happen later..."

The increase in interest that needs to be paid sucks, definitely. It would be nice if they lowered the interest rates even a little bit to help with the fact that nothing else is subsidized. That could just me being wishful.

People flipped out like this when taxes went up in my state for a couple of months, then it died down. I really don't think that it's a super huge deal except that this is not a part of the solution, this is a part of "drop all the weight we can to keep running a little bit longer" mindset where in a few years they will have to re-evaluate things again.

 

[Fuaaark]

The cuts from subsidized loans are apparently going to pay for pell grants, but I thought I heard somewhere that pell grants are also getting cut - at least during the summer.

 

[Corpseman]

That's fantastic. They've already cut my GI Bill benefits - meaning my school went from fully paid for, to costing me a lot of money - and now this. Don't forget to thank your parents for helping us get here 😉.

Old GI Bill or the new one? And what exactly did they cut?

 

[chemguy79]

The cuts from subsidized loans are apparently going to pay for pell grants, but I thought I heard somewhere that pell grants are also getting cut - at least during the summer.

I would love there to be additional transparency with respect to how pell grants are awarded, EFC, etc. when it comes to student aid. The financial aid system in this country is morally bankrupt and fiscally corrupt, so removing subsidized student loans for graduate students doesn't actually surprise me. *sigh* As for summer pell grants, I remember having issues obtaining a SPG back in 2001 when I was in undergrad, so I'm not surprised that there are even more issues today.

Further kvetching below ...

In North Carolina, Community College tuition has increased 50% over the past FOUR semesters without any increased course offerings, additional instructors, etc. (Furthermore, when I attempted to take a position as a summer Adjunct professor for a Gen Chem course taught in BFE, NC ... the pay was MARGINALLY more than I make, on an hourly basis, tutoring privately.)

This summer, I recently finished a Medical Spanish course (AMAZING class for potential pre-pharm students if you can find it), taught by the dean of the School of Liberal Arts. Hearing his frustration about the way that class offerings are decided (among other issues) was difficult to stomach. While there is an impetus for change, more and more students are attending for-profit universities which is taking even more money out of the pockets of public universities. It's a bit of a rant, but things are going to become even worse for graduate students and the working students with respect to financial aid before they get any better.

 

[NaOH]

**** sucks, but what can ya do? I still maintain that, if we as a nation are serious about getting our financial house in order, then we are ALL going to have to feel the pain - no program should be inviolate, no tax increase should be dismissed out of hand.

Do we have the collective willpower to actually do it? One wonders, Croaker... one wonders.