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  1. #1
    Slaol's Avatar
    Slaol is offline Elite Member 7164 points
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    President's Budget removes subsidized Stafford Loan interest benefit

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    During the in-school and grace periods the federal government pays the interest on subsidized Stafford loans. The budget proposal will eliminate this benefit on subsidized Stafford loans to graduate and professional students, but retain it for undergraduate students...

    ...The US Department of Education says that the subsidized interest benefit for graduate students is "poorly targeted" at financial need. Eliminating the subsidized interest benefit will increase the graduate student debt burden, but the income-based repayment plan and public service loan forgiveness program provide a safety net for students who struggle to repay their debt. This change will save about $2 billion.

    The elimination of subsidized interest on loans to graduate and professional students will increase the debt at repayment by about a fifth, adding thousands of dollars to their debt burden.

    President O Proposes Cuts in Aid Programs to Preserve Pell Grant
    - Slaol
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    American University of the Caribbean (AUC) class of 2012

    Chief Resident Family Medicine
    Hennepin County Medical Center

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    Slaol's Avatar
    Slaol is offline Elite Member 7164 points
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    Nothing thrills me more than the spectre of more debt.
    - Slaol
    http://corbinmd.blogspot.com/

    American University of the Caribbean (AUC) class of 2012

    Chief Resident Family Medicine
    Hennepin County Medical Center

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    RfisherMD is offline Senior Member
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    ...losing the subsidized interest benefit will add $1,676 to each $8,500 loan balance by the time the student enters repayment, a 19.7% increase. This adds more than $3,333 to the debt burden of graduate and professional students who graduate with a typical amount of subsidized Stafford loans. This assumes that the borrower defers repaying the interest by capitalizing it and that the interest is capitalized once, at repayment.
    more debt!! I think it will add $6-8 thousand to our debt based on the number of times we apply for loans.
    AUC c/o 2013
    FM resident

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    Slaol's Avatar
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    The question I want answered is will this affect loans we have already taken out - or just new loans?
    - Slaol
    http://corbinmd.blogspot.com/

    American University of the Caribbean (AUC) class of 2012

    Chief Resident Family Medicine
    Hennepin County Medical Center

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    tomtheturkey is offline Junior Member 510 points
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    Great just another reason for our best and brightest to turn away from grad or professional school. The recruitment poster should read "look now..your degree, fortified with more debt and a few more years of hard living". Its great ideas like this that weigh our country down while other country's pass by us in education.

  6. #6
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    slevit1MD is offline Ultimate Member 665 points
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    Glad I'm finishing before that goes into effect!
    slevit1, M.D. Hidden Content
    PGY-1, Emergency Medicine

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    RfisherMD is offline Senior Member
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    I think it is any new Graduate level- "subsidized Stafford" loans while you are "in-school" or on a "grace period" If I read correctly, any "subsidized" undergraduate loans will remain subsidized, it is just the graduate loans that are changing.

    Am I confused or does the "in-school" period account for the semesters we are still at AUC? Ex: I get a loan for 1st semester; Is 2nd semester considered an "in-school" time for that 1st semester's loan? Or, does it wait until graduation to take effect?
    AUC c/o 2013
    FM resident

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    Slaol's Avatar
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    Quote Originally Posted by Rfisher View Post
    I think it is any new Graduate level- "subsidized Stafford" loans while you are "in-school" or on a "grace period" If I read correctly, any "subsidized" undergraduate loans will remain subsidized, it is just the graduate loans that are changing.

    Am I confused or does the "in-school" period account for the semesters we are still at AUC? Ex: I get a loan for 1st semester; Is 2nd semester considered an "in-school" time for that 1st semester's loan? Or, does it wait until graduation to take effect?
    Basically it means that any subsidized loans you take out now will accrue interest until you pay it back.
    - Slaol
    http://corbinmd.blogspot.com/

    American University of the Caribbean (AUC) class of 2012

    Chief Resident Family Medicine
    Hennepin County Medical Center

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    RfisherMD is offline Senior Member
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    Quote Originally Posted by Slaol_121 View Post
    Basically it means that any subsidized loans you take out now will accrue interest until you pay it back.
    What I thought. Thanks.
    AUC c/o 2013
    FM resident

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    Quote Originally Posted by Rfisher View Post
    I think it is any new Graduate level- "subsidized Stafford" loans while you are "in-school" or on a "grace period" If I read correctly, any "subsidized" undergraduate loans will remain subsidized, it is just the graduate loans that are changing.
    You are correct.

    Quote Originally Posted by Rfisher View Post
    Am I confused or does the "in-school" period account for the semesters we are still at AUC? Ex: I get a loan for 1st semester; Is 2nd semester considered an "in-school" time for that 1st semester's loan? Or, does it wait until graduation to take effect?
    Under the new proposal, your 1st semester loan would accrue interest from the day you cashed the check.

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