Impact of proposed student aid cuts? Forum

[Veyron]

Anyone know what the impact of the proposed reductions in subsidized loans will be on our class? Like will we only have to pay more as 3Ls or will the pain start in January?

[vanwinkle]

Moved.

[fish52]

Anyone know what the impact of the proposed reductions in subsidized loans will be on our class? Like will we only have to pay more as 3Ls or will the pain start in January?

We accept our loans for the entire year, don't we? So I would think that we wouldn't feel the pain until next year when we aren't offered any subsidized loans.

[GMVarun]

Veyron wrote:
Anyone know what the impact of the proposed reductions in subsidized loans will be on our class? Like will we only have to pay more as 3Ls or will the pain start in January?

We accept our loans for the entire year, don't we? So I would think that we wouldn't feel the pain until next year when we aren't offered any subsidized loans.

Yes, so next year, you have to pay interest on 8,500 of your loans that you otherwise would not have to pay. Stafford loans have an interest rate of 6.8%, and the max subsidized loans you can take out for a year is 8,500. Interest for a year on 8,500, is roughly 600 (I think if you do not pay it, it adds onto the principle and itself starts accruing interest so its 578+some). Not a huge deal in the big scheme of things, but certainly an added cost that must be taken into account.

In other news, do not go to law school. It costs a lot of money.

[schooner]

...

[fish52]

Here's CBO's formal description (page 7 of the pdf (LinkRemoved)) of the Senate Democrats' debt ceiling plan, i.e., the version more likely to become law than the House Republicans':

Beginning July 1, 2012, subtitle B would eliminate the interest subsidy on subsidized student loans for graduate students while a borrower is in school, in the post-school grace period, and during any authorized deferment period. The current annual and cumulative loan limits for unsubsidized loans would be adjusted to permit students to borrow additional funds in the unsubsidized loan program. ... Because borrowers would be responsible for the interest accrued on those loans while in school, CBO estimates that this provision would reduce direct spending by $8.2 billion over the 2012-2016 period and $18.1 billion over the 2012-2021 period.

So it sounds like on July 1, 2012, the federal govt will stop paying the interest on all existing subsidized loans and start issuing unsubsidized loans only.

Awesome....glad we are getting sold out for $18 billion when the size of the federal debt is $14 trillion.

[Veyron]

Here's CBO's formal description (page 7 of the pdf (LinkRemoved)) of the Senate Democrats' debt ceiling plan, i.e., the version more likely to become law than the House Republicans':

Beginning July 1, 2012, subtitle B would eliminate the interest subsidy on subsidized student loans for graduate students while a borrower is in school, in the post-school grace period, and during any authorized deferment period. The current annual and cumulative loan limits for unsubsidized loans would be adjusted to permit students to borrow additional funds in the unsubsidized loan program. ... Because borrowers would be responsible for the interest accrued on those loans while in school, CBO estimates that this provision would reduce direct spending by $8.2 billion over the 2012-2016 period and $18.1 billion over the 2012-2021 period.

So it sounds like on July 1, 2012, the federal govt will stop paying the interest on all existing subsidized loans and start issuing unsubsidized loans only.

Awesome....glad we are getting sold out for $18 billion when the size of the federal debt is $14 trillion.

In other news, no cuts to social security or medicare.

[cronous]

In other news, no cuts to social security or medicare.

The old geezers vote, we do not. That is the real problem.

[schooner]

...

[Veyron]

I guess there's also a chance that federal loan disbursements won't go out at all (not just interest payments starting next year), if the debt ceiling isn't raised and the Treasury Department decides not to prioritize student loan outlays. http://chicago.cbslocal.com/2011/07/29/ ... s-at-risk/

Schools out for summer. Schools out for ever?

[cubswin]

In other news, no cuts to social security or medicare.

The old geezers vote, we do not. That is the real problem.

As if young people would vote for politicians looking to cut entitlements if they flocked to polling places in record numbers.