Culture

In Case You Missed It: Grad student loans

debt

I really don’t like writing about politics on Heave. Not only do other writers do it better than I could, but I feel like if somebody really wants to read about them online, there are plenty of outlets tailor-made for that purpose. That being said, for this week’s Missed It I felt remiss if I didn’t make a bigger deal about something that I feel a lot of people have missed in the past week, in the midst of the Debtpocalypse (seriously, Fox News was calling it the Countdown to Default, complete with a ticking clock).

One of the many tenets of the debt ceiling agreement passed Monday night is a new contingency regarding student loans, specifically at the graduate level. At one point, it had been proposed that all loans, undergraduate included, would start accruing interest immediately. Now, however, that’s been refocused. From CNN:

As part of the savings to trim the deficits, Congress would scrap a special kind of federal loan for graduate students. So-called subsidized student loans don’t charge students any interest on the principal of student loans until six months after students graduated.

Congress would also nix a special credit for all students who make 12 months of on-time loan payments.

The changes would take place July 1, 2012.

For taxpayers, the savings taken from the pockets of students will total $21.6 billion over the next ten years, according to the Congressional Budget Office.

For graduate students who qualify for the maximum amount of subsidized loans, it could tack several thousand dollars to the cost of going to school.

What does this mean? First of all, the whole reason I wanted to write this column was that the popular wisdom going around is that grad students will now be paying their interest while in school. To the best of my knowledge, that rumor has been exaggerated. Currently, with subsidized federal loans, you can elect to pay them back, or do the standard deferral until six months after graduation. You’ll still be able to do that; this is just more money, probably adding a couple grand more to those loans.

Therein lies the problem. Now, in principle I understand that in a time of need, everyone gets to carry the bag. The problem is that not everybody is. There are numerous examples strewn through the debt ceiling bill, but the point is that it’s already hard enough to get an education without crippling debt, compounded by the total lack of jobs for all the kids who grew up being told they had to put down six figures or they wouldn’t be able to land one of those now-nonexistent jobs, but now the debt is being increased.

Meanwhile, the most affluent percentage of the U.S. continues to not be taxed. Also, before anybody replies in anger: I’m not playing partisan here. For the sake of full disclosure, I operate strictly moderate, and if anything I don’t know how we’re talking about a divided nation, when Republicans and Democrats alike have united at a time of great importance to fuck pretty much everybody over.

We’ll see what happens with this grad loan amendment, but don’t be surprised if numbers, at least for a short time, start to drop alarmingly in enrollment. Only time will tell. As a final reading, the New York Times has an intriguing piece on student loan lending. Having taken out huge Citibank loans just to be able to finish my undergraduate degree, a situation that low offers on federal loans necessitated,  I can testify to what this article states; I’ve accrued over $8,000 interest on the loan I took out for my final school year, and I just graduated a month and a half ago.