Students, universities and politicians around America may be eagerly waiting for a ruling that will extend student loan interest rate cuts by one more year, but few people are paying attention to other ways by which students will be forced to shoulder more of the expenses on their loans.
Take for example subsidized loans for graduate students.
Graduate school students will be made responsible for paying the interest on their federal loans while still in school and immediately after graduating. This change alone translates to $18 billion more in interest payments over the course of ten years, all of which will be shouldered by the students.
To cut a long story short, those seeking graduate degrees that have become vital for white-collar jobs can no longer rely on the government to help them pay off interest in the short-term. Those looking to get into graduate school must now step back and carefully balance their finances if they don’t want to graduate with tens (or hundreds) of thousands of dollars in debt.
At the same time, the federal government will stop paying the interest of undergraduate loans for six months after graduating. That’s an extra $2 billion that undergraduates have to fork out from their pockets.1 What’s worse is that even if student loan interest rates stick at 3.4%, they now have to scramble to pay off the interest as soon as they receive their diplomas and toss their caps in the air.
Bryce Freeman, a student at the University of Florida, puts the whole thing into perspective: “You have to find a balance between a program that’s going to get you a good-paying job and one that makes sense financially.”
Freeman couldn’t have said it better, as education is becoming more and more a privilege than a basic human right.