Students to feel pinch in debt deal

<p>"Some students will have to start paying off their loans while they're in school under a last-minute debt ceiling deal to keep the country out of default and reduce deficits by at least $2.1 trillion over a decade.</p>

<p>As part of the savings to trim the deficits, Congress would scrap a special kind of federal loan for graduate students. So-called subsidized student loans don't charge students any interest on the principal of student loans until six months after students graduated.</p>

<p>Congress would also nix a special credit for all students who make 12 months of on-time loan payments.</p>

<p>The changes would take place July 1, 2012 ..."</p>

<p>Debt</a> ceiling deal to hit grad students hard - Aug. 1, 2011</p>

<p>So, our students are the only ones that have to make sacrifices to improve this mess. The kids that did not play a part in the problem at all, and many are not even able to vote yet? Makes me very upset.</p>

<p>I think most grad students are old enough to vote.</p>

<p>
[quote]
So, our students are the only ones that have to make sacrifices to improve this mess. The kids that did not play a part in the problem at all,

[/quote]
</p>

<p>Well, they're not the ONLY ones. But I agree that we are pushing the problems we have caused by our greed onto the next generations, which IMO is indefensible.</p>

<p>While perhaps painful to today's grad students, the simple fact is that we probably have too many grad students anyway. MAsters programs have become cash cows for Universities. Do we really need to graduate thousands of lawyers every year, when many of them will be unemployed when they earn their JD?</p>

<p>The savings imply that there is $25 billion in loans taken out annually for graduate school. Is this really a good idea?</p>

<p>This is just the type of expenditure that should be cut. There may be a few fields where we want to encourage the acquisition of advanced degrees (science-related, perhaps), but I can't think of any reason for the American taxpayer to be enabling the creation of more lawyers, investment bankers, or experts in 18th century Iberian sonnets. If people can seriously defend subsidized grad school loans, there is no hope that we can come to an agreement about whose ox will be gored in the reduction of government spending.</p>

<p>I just don't think that students are who they should have targeted first, that is all. And yes, grad students CAN vote, but not the students just entering the college process. As far as grad school attendance goes, there may be too many lawyers, but there are not enough of many other professions at grad level.</p>

<p>It's important to make the distinction between professional schools and more academically oriented grad programs. Many of the latter are fully funded by the institutions, and the cuts in loan subsidies won't hurt them much. (Yes, I know there are exceptions.) Most of the former are presumably to prepare the student for a lucrative career, so perhaps that should be on the chopping block when things are tight. There are careers that require graduate degrees and that don't pay all that well but that are socially useful, and I would hate to see it made harder for talented people to obtain the necessary credentials in those fields.</p>

<br>


<br>

<p>Undergrads are minimally affected.</p>

<p>Grad students are adults. One could argue that undergrads are adults too.</p>

<p>What should we do for the 50% that don't go to college?</p>

<p>While it's nice to get subsidized loans, let's not forget that the primary benefit to students is that they actually get a loan.</p>

<p>So med school at $70,000/yr just got increasingly more expensive (and already a large portion of loans are unsubsidized). This increased expense will come at the same time that future income from the med field is expected to decrease. We already have a shortage of primary care doctors in rural/poorer areas and this will just make it more difficult to change that.</p>

<p>This isn't making school more expensive, it's just requiring grad students to budget better. While I'm not pleased with the one-size-fits-all approach here (money issues are rarely that cut and dry), I can say that most grad students are getting wayyyy too much money to live on. This will encourage us to recognize that the money we are using to pay for rent/food/etc is not really our money, and we should be very careful about how we spend it. If you can't afford the interest each month, it should make you think twice about going to grad school right away.</p>

<p>I'm surprised that anyone on CC could have thought the debt ceiling legislation would pass without affecting college funding in some way. </p>

<p>I happen to think cuts to subsidized grad school loans might be the easiest pill to swallow. It's kind of naive to think all college funding would be immune to the axe. We're talking trillions of dollars here. Trillions. Everybody's gonna feel it. If I had to choose, I'd pick grad students before undergrads. :o</p>

<br>


<br>

<p>Absolutely.</p>

<p>I had no idea about financial aid cuts until last week I think (when I started the thread that got killed because it turned political). Both sides were for the grad student loans cuts so I figured that there might be some merit to it.</p>

<p>I'm not sure what to make of this - using the savings from canceling this program to fund Pell Grants? </p>

<p>I kind of take the opposite view, MommaJ - there are far too many undergraduate students who take worthless degrees, and wind up working in the local Starbucks - many would do far better with a trade school. Most graduate students go on to viable specialized careers - an undergraduate degree in most scientific fields is worthless by itself.</p>

<p>I mean, where do you think "Doctors" come from? Correspondence courses? </p>

<p>Just fabulous news for those grad students who still owe for their undergraduate education.</p>

<p>Many trades are taught in community colleges today so financial aid redirected to those schools may accomplish what you want.</p>

<p>In this economic crisis, Americans have been asked to serve our country in whatever capacity they best can. My son has dedicated many hours to improving our country—tutoring high-risk children in local schools, worked at summer camps, and on his way to becoming an Eagle Scout, he completed hundreds of hours of service projects helping to improve schools, playgrounds, beaches, and nature centers. He continued his service by choosing a career in medicine in order to literally and figuratively heal the wounds that exist in this country. This decision was not easy. Medical school is a long path, he will take out over $300,000 in loans from schooling without including the interest. America does not have enough physicians, and our government has called for young students to consider this career. Yet, they are thanked by taking away subsidized loans. How will he pay interest while in school? Is he expected to take on jobs in addition to shadowing and studying and practicing? Medical school requires “service learning” in his community of New Orleans which provides free health care for the poor and help with other essential community projects like Habitat for Humanity. Not only does he serve the government with free labor, but he is expected to pay out of pocket to serve. If we need doctors so badly, why would we want to discourage young people from choosing this career path which now faces an uncertain financial future because of the new universal health care policy AND increased loans? Why would anyone want to choose the most underrepresented specialties such as family care (which are also less lucrative) and now have to worry about paying back even more debt? I realize these cuts will help keep Pell Grants, but many more students rely on these subsidized loans and are ineligible for Pell Grants even though their parents are unable or unwilling to support them financially. We wonder why our health care system and economy continue to deteriorate?</p>

<p>300,000 in debt? That's absurd. Dedicated as he is, I'm not at all convinced that this is a wise course. 300K over 10 years at 2% is $2760/month. Over 20 years at 1%, it's still 1400/month. And the reality will be worse. Even with a starting salary of $150k, it will be hard.
One of the problems with gov. subsidized loans is the default rate which costs us all quite a bit. It's around 7% right now. (It's been higher too, but 7% is quite a bite.)</p>

<p>$300,000, 20 years, 7% interest (for example) = $2326/month, $27,912/year - after-tax money. At a 30% marginal tax rate (for example), that's about $40,000/year. No worry - he'll be paid off by the time he's 50 or so.</p>

<p>Insane.</p>