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Megan Wachspress, a graduate student is going to start her first year in Yale Law School this coming autumn with lots of books, supplies and the added burden that comes with the increased interest payments for the student loans she has availed in order to continue her education.
With the interest discount for the federally-supported Stafford graduate loan plan stopped as a part of the government’s decision to increase the country’s debt ceiling, students like Wachspress are likely to face a constant struggle to fund their study.
“It’s like the government is saying, ‘congrats, you are going to spend $10,000 to loan money and finish your education!’”, says Wachspress who serves as a campus secretary of the United Auto Workers Local 2865 (a union that represents around 12,000 readers, tutors and graduate student instructors in the UC).
“It is not just a slash in funding – it is asking students to pay more to the government by increasing the interest rates.”
Apart from the cutting of interest discounts that will take effect in July next year, the Budget Control Act of 2011 will also cut a credit given to those students who make loan payments right on time.
An added $17 billion was brought to the Pell Grant program that gives the undergraduates federal financial help at the expense of cutting the interest subsidy for graduate students. This is in order for it to maintain the maximum award amount of $5,550.
As a consolation for the graduate students having to choose between paying interest on loans or allowing it to accrue while they are in school, the amount they can borrow in federal Stafford loans annually will be increased, according to a study by the Congressional Budget Office.
A UC Berkeley financial secretary for the union and graduate student Charlie Eaton has said that the cuts only make graduate students all over the UC more financially anxious. He added that the union is discussing with members on how to respond to this concern, though no plans have been decided on yet.
According to the legislative director of the UC’s Federal Government Relations office in Washington, Carolyn Henrich, prelim information for the 2010-2011 academic year have shown that 16, 561 graduates loaned $123.6 million in discounted Stafford loans.
Henrich added, “The interest rate is increasing on Stafford loans; as of now it’s already 3.4% but it can go up to 6.8%. That’s why the students will have to pay more for the loans.”
Chair of the UC system-wide Academic Senate Daniel Simmons stated that the recent plan might have been orchestrated by the government, however, a part of the blame lies in the state also.
Simmons said, “The university is trying to do its best to aid low-income students by making higher education available even if the state is not doing much to help us out. It is inevitable – a loss of any program that alleviates education funds will make it difficult for students to pay.”
He added that there will be further cuts to student aid. “The economic condition is quite bleak, but we are still hoping that it will flip around and the government can keep the research and education ongoing – one of UC’s general priorities.”
