During the debt ceiling debate on Capitol Hill, Congress cut $917 billion in programs and slashed federal funds across the board.
MU graduate students will feel the impact of these cuts almost immediately due to budget restrictions on federal loan programs. Graduate students who have taken out loans may now have to start paying their loans back while they are still in school.
“School is going to become increasingly expensive for many students across the country,” said Luke Russell, MU graduate professional council issues coordinator. “For some that might mean that it no longer remains a viable option. We seem to be living in a time when most everyone is tightening their already tight belts.”
To help reduce the national deficit, Congress made the decision to end funding for certain federal loan programs for graduate students. These federal subsidized loan programs allowed students to take out loans interest-free if they were paid back within six months of graduation.
“Graduate school is an expensive and time-consuming endeavor,” Russell said. “This is incredibly unfortunate because it is also one of the key places where innovation sparks to help keep America on the front-lines of technological development, and help America remain globally competitive.”
The changes for loan subsidies will go into effect July 1, 2012.
“Graduate students who were eligible for subsidized loans will now experience higher costs associated with their student loans,” said Nick Prewett, MU interim director of student financial aid. “The amount of total loan eligibility will not change, so students still have loan options, albeit at a higher cost.”
Though the impact on graduate students will be costly, taxpayers will save $21.6 billion over the next ten years because of the changes made to federal loans for graduate students, according to the Congressional Budget Office.
“It may cause some people sitting on the fence to rethink attendance, however students’ intent on a graduate education will still attend,” Prewett said.
Congress also cut funding that would provide credit for students who repaid their loans within one year of graduation.
“In the short term I don’t think it will have much of an effect on students getting loans,” Graduate Professional Council President Kristofferson Culmer said. “The impact will not immediately deter students from taking out loans, or make them think twice about attending grad school.”
Due to budget issues, Congress and the United States Department of Education are utilizing the savings from graduate loan subsidies to reinforce the Pell Grant program, Prewett said.
“Students look at graduate school as a way to improve their employability after college,” Culmer said. “It will be more costly, but it’s still a valuable investment to get a graduate degree.”
According to the Kansas City Star, $644 million in Pell Grants were awarded to Missouri college students in 2010. By cutting federal loan subsidies, Congress achieved its goal of providing additional funding for undergraduates by adding $17 billion to provide them with additional financial aid until 2013.
With 10 months left until loan subsidies are removed from the federal budget, Russell said he worries that Congress is dealing a significant blow to U.S. education.
“One of the worst things the federal government could do now is to also cut funding for research and grants,” Russell said. “It would not only make it incredibly difficult for American students to choose to continue on to, and remain in, graduate school, but it could also drastically impact our ability to remain premiere producers of research.”
