Grad Students Miss Out on Student Loan Relief
Student debt and grad school students.
The U.S. Congress has stepped in to help undergraduate students by keeping student loan interest rates from doubling on July 1 as had originally been proposed. One group, graduate students, are shut out of the loan relief program, and will now pay higher interest rates on their loans. Moreover, the six-month repayment abatement after graduation has ended, with their first loan payments due the same month that they finish school.
Higher Interest Rates
The news for graduate students does not come as a surprise, but it is a disappointment nonetheless. Already, grad students pay a higher rate on their federally-subsidized Stafford loans and those loans will accrue interest as soon as they are taken out.
Grad students have been shut out due in part to political wrangling between Republicans and Democrats over limits to the debt ceiling. The two parties found $6 billion to fund the undergrad loans, but could not reach a consensus to cover grad students. Some have argued that student loans are for poor and middle-class students while grad students are typically those with the means to reach higher.
Trillion Dollar Debt
Student loan debt has a political hot potato throughout much President Obama’s term in office, with some groups including the left-wing Student Labor Action Project calling for student loan debt to be eliminated through forgiveness. The collective student loan debt passed the one trillion dollar mark in 2012 and shows no sign of abating. Rising college tuition rates have been blamed, but there are also more students than ever before enrolled in college.
The College Board in its 2011 analysis of graduate students and loan debt found that 26 percent of students that graduated with an advanced degree in 2007-2008 did so without any student loan debt whatsoever. Another 14 percent had undergrad debt, but managed to get through grad school without taking on more debt. Thus, four in 10 grad students managed to self-fund grad school.
High Debt Levels
For those students that did borrow money to attend grad school, their loan debt levels offered a striking contrast to those that did not. Some 7 percent assumed at least $80,000 in student loan debt, while 5 percent borrowed between $60,000 and $79,999. Under the new plan, loan debt accumulates as soon as these loans are taken out with repayment due to begin when students obtain their graduate degrees, a double whammy for some who have argued for relief that isn’t coming.