There was recently a lot of hullabaloo in Washington about student loans. Undergraduate federal student loan interest rates were set to double, and this would have increased the cost of an undergraduate education by many thousands of dollars per student. Luckily, just days before the increase was slated to take effect, a divided Congress and the President passed a law keeping interest rates where they are. This was hailed as a rare bipartisan victory for students during a time of hyper-partisanship and legislative gridlock.
Few, however, have been talking about the serious negative legislative changes that are slated to take effect soon and will impact students in a big, big way:
- For undergraduate federal subsidized loans, the government will no longer cover interest during 6-month grace periods post-graduation. This will effectively tack on hundreds, if not thousands, of dollars onto undergrads’ student loan bills after they graduate. Students will collectively pay $18 billion more out of pocket over the next decade because of this change.
- For graduate students, the government will no longer cover interest at all for federal graduate loans while students are in school and in their grace period after they graduate. This will cost graduate students an additional $2 billion out of pocket over the next decade.
The compromise bill passed by Congress last month certainly was a good thing, but we have a long, long way to go before we see real changes that will help student borrowers. Until then, the bad news will continue.
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