I just received this email today, and I am so thankful that my program is only one year long. I have no idea what the cuts are like for undergraduates, but this will definitely make a difference for many students hoping to pursue higher degrees.
Like those of us in the Financial Aid Office, you may have been following the news regarding the debt ceiling debate in Congress over the summer. In early August, the Budget Control Act of 2011 was passed into law.
Two provisions of this budget Control Act will have an impact on graduate students borrowing federal loans beginning with the 2012-2013 academic year. These changes will not apply to any loans borrowed prior to July 1, 2012.
- Elimination of the subsidy on Direct loans made to graduate students
- Direct loans to graduate students beginning with the 2012-13 academic year will no longer be subsidized. While the total amount that students can borrow will remain $20,500 per year, the full amount will be unsubsidized, meaning interest will accrue from the time the loan disburses.
- Elimination of the upfront fee rebate on Direct Unsubsidized and Grad PLUS loans beginning with the 2012-13 academic year
- Loans borrowed prior to 2012-13 had an origination fee of 1% for Direct loans and 4% for Grad PLUS loans. However, .5% of the Direct fee and 1.5% of the Grad PLUS fee were suspended and were waived if a borrower made their first 12 monthly payments on time. Beginning with loans for the 2012-13 academic year, these upfront rebates have been eliminated.
For students planning future graduate study, it will be important to understand the implications of these changes which will go into effect next year on your future educational costs. For current doctoral students planning on borrowing in future years, you will want to make note of this important change.
This system is groaning. I’m a firm believer in smaller government, and I think regardless of current policies, we as individuals can act in ways that correspond with our beliefs. What do you think we (the people) can do to work around this? Should we be changing our mentality concerning graduate school? Should we be content with state school graduate programs? Perhaps even, the whole mentality of preparing students for careers ought to be tweaked. If we gave them marketable skills when they were younger, maybe that would prepare them better for the job market? Does this mean we nix the liberal arts initiative? DO WE THEN TURN INTO ASIA? WHERE THEY FUNNEL THEIR CHILDREN INTO A SET CAREER STARTING FROM WHEN THEY’RE YOUNG?! Okay, I’m starting to hyperventilate. Maybe it’s better for me to take a nap and come back to this.