They can choose to pay the interest while they're in school. Graduate students would start accruing the interest rate payments while they're in school, but they wouldn't have to start making payments on the interest or the principal until after graduation. This change would shift some $125 billion in loan volume over to unsubsidized loans and would cost students $18.1 billion over the next decade, according to the Congressional Budget Office. But with a subsidized loan, the government pays that $207 each month the student attends school until six months after graduation. Over the course of a degree, graduate students can accrue up to $138,500 in direct federal loans, with $65,500 from subsidized loans.Ī graduate student who borrows the maximum of $65,500 in subsidized loans would owe $207 a month in interest payments over the course of 10 years. The maximum a graduate student can borrow from the federal government is $20,500 a year, including $8,500 from subsidized loans where the federal government absorbs the interest rate while the student is in school. once again having the highest proportion of college graduates in the world by 2020," said Pauline Abernathy, vice president of the Institute for College Access & Success. "Full funding for Pell Grants is absolutely essential to fulfilling the president's goal of the U.S. The rest of the savings goes to deficit reduction. That's why most groups can live with the cuts to graduate student loans. Of the $22 billion saved, $17 billion will go to fund Pell Grants, which only leaves that program $1.3 billion short, said student aid groups. The money saved by the student loan cuts would help pay to keep Pell Grants, which so far are maintained at a maximum grant of $5,500 a year for some 8 million poor students. The idea for the cuts originally came from the Republican-controlled House, but even Senate Majority Leader Harry Reid proposed cutting the graduate school subsidized loans in budget talks last week. The changes would take place July 1, 2012.įor taxpayers, the savings taken from the pockets of students will total $21.6 billion over the next ten years, according to the Congressional Budget Office.įor graduate students who qualify for the maximum amount of subsidized loans, it could tack several thousand dollars to the cost of going to school. Congress would also nix a special credit for all students who make 12 months of on-time loan payments.
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