US Universities are implementing changes on student loan. Among the changes are the increase of interest rate for Stafford loans and the ineligibility of graduate students and non-diploma holders of federal loans. The changes are in lieu to the US government’s efforts in regain economy since its slowdown due to recession.
Stafford loan interest rate increase on hold
Stafford loan interest rate will still be subsidized by the government for more than one year, a congressional decision said. In addition, the interest rate of 3.4 percent will be covered by the subsidy and will remain at that rate for more than one year. This was in contrary to the reported 6.8 percent increase in interest rate this year.
The temporary provisions to halt the rise of the interest rate will be until July 1, 2014. Loan holders will not be able to enjoy the grace period after the said date.
Currently, the student’s loans subsidize half of the students year of accruing interest. This usually takes six months. It is only till then that they are obliged to pay. Although, the rise in interest rate from 3.4 percent to 6.8 percent will commence after two years, the Stafford loans will still accrue interest.
Despite the clear advantage of the student loans changes to students, critics argued that it may confer possible loopholes. One loophole lays in the in government repayment programs. Economy may be at stake due to the steady rise of student loans credit. In the same, Income-Based Repayment may also serve as a loophole with the evident increase of unemployment, a nonprofit research organization cited.
Another loophole may be the rise in student debts. For this reason, the Institute for College Access and Success (TICAS) encourage students to choose student funds wisely. Reports show that huge number graduates of a four year course in colleges are succumbed to debts. There is an average debt of $24,000 from each student in regular universities and $48,000 for more known colleges.
No subsidy for graduate students
Meanwhile, graduate students can no longer avail the government-subsidized Stafford loans. They will automatically be obliged to take the 6.8 percent interest rate in the instance that they precede schooling.
Graduate students usually acquire federal loans to fund their schooling even without the government subsidy. However, even without the availability of the student loans, graduate students will still be covered by the loan repayment programs after graduation. They will also be covered by the Income-Based Repayment and Public Service Loan Forgiveness and the unemployment deferment as well.
No diploma, no student loan
On another note, students without a high school diploma or GED are no longer covered for federal student loans. This includes student who will be enrolling for the first time. However, this excludes those students that are home schooled. Such students that have already completed some college will still be eligible for federal aid.
Due to the numerous changes that occur in terms of student loans, students are encouraged to choose their programs wisely and carefully. Students are encouraged to choose programs that would benefit them in the long run and give them a sure job after graduation.