Wednesday, July 27, 2011
The competing deficit reduction/debt ceiling increase plans proposed by House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-NV) would both cut off subsidized Stafford student loans for graduate and professional students.
Currently, graduate and professional students can take out up to $20,500 a year in federal loans, and up to $8,500 of this amount can be in subsidized loans if they’re found to have financial need. (Details here, at the government’s student aid web site.) With the subsidized variety of loans, Uncle Sam pays the interest due while students are in school and during a six month “grace period” after they’ve left school and before repayment begins. With the unsubsidized variety, interest accrues while students study and during the grace period, adding to the amount they must pay back when they graduate.
Under both the Boehner and Reid plans, no new subsidized loans would be issued to graduate students after July 1, 2012.