Starting next year, graduate and professional students will pay more for their education, thanks to a last-minute debt deal reached by Congressional leaders last week.
The Budget Control Act specifies, among other things, the end of federal subsidies for loans taken out by graduate and professional students — a cutback expected to save the government an estimated $18.1 billion over the next decade.@@http://money.cnn.com/2011/08/01/news/economy/debt_ceiling_students/index.htm@@
The government currently covers the interest accrued on the principal of these loans while students are in school, as well as a six-month period after graduation. But starting June 1, 2012, graduates will be charged with that interest.
Not only will this impact the 52 percent of University graduate and law students who take out subsidized loans. It’s also a hit to the approximately 80 percent of loan-receiving graduate students nationwide, as calculated by the National Center for Education Statistics.
According to the Chronicle of Higher Education, this cutback could cost graduates an additional $7,000 in interest, causing some prospective graduates to re-evaluate the feasibility of an advanced degree.
Christopher Hatefi graduated from the University in 2010 with a Bachelor’s degree in history. Today he wants to become a middle-school history teacher, but needs a Master’s to go into the education field.
“I was relying on loans, as grad school is really expensive,” Hatefi wrote in an email.
“This means that things will be a bit more complicated for me,” he wrote. “I still do want to go. I just don’t know yet how I will.”
An outspoken opponent of the new bill, Oregon Rep. Peter DeFazio admonished lawmakers, calling the deal ineffective and unbalanced.
The bill “doesn’t ask a single thing of millionaires, billionaires, corporations that avoid taxes. (It) doesn’t close a single loophole,” an indignant DeFazio declared on the House floor last week, hours after Representatives passed the bill.
“It has one specified cut — student financial aid,” he said. “What kind of world do you people live in?” @@Here comes the BOOM@@
Undergraduates are hit by the new bill as well, but with less impact. Incentives on loan repayment — an interest rate discount offered to students who make the first 12 payments on time — will also be eliminated next year, trimming $3.6 billion from the deficit over the next ten years. @@http://www.wnyc.org/articles/its-free-country/2011/aug/03/debt-deal-so-far/@@
There is some good news, however, for students that receive Pell grants, of which 27 University of Oregon graduates are recipients.
Though the new bill scraps subsidies to graduates, it redirects $17 billion into the Pell grant program, making college more affordable for low-income students and ensuring that those who qualify are still eligible for the maximum allotment of $5,500 annually.@@http://chronicle.com/article/Debt-Deal-May-Offer-Only/128468/@@
It’s a boost that ASUO president and Oregon Student Association board member Ben Eckstein @@http://directory.uoregon.edu/telecom/directory.jsp?p=findpeople%2Ffind_results&m=student&d=person&b=name&s=Eckstein@@is grateful for, as it strengthens overall access to higher education.
Eckstein expressed discouragement with the cutback to subsidies, saying it was disappointing to see the government preserve Pell grants at the expense of appropriations to graduates.
It’s unfair for students to shoulder the burden of deficit reduction, Eckstein said, especially given education’s importance to the future of this country.
“We really, really should not be cutting into the single most important investment our country makes,” Eckstein said. “I don’t think any higher ed program is expendable, and it’s a problem that we have lawmakers who think they are.”