Graduate students at CSUN will have to start paying interest on their loans next fall while undergraduate students will still be able to breathe easy when it comes to their borrowed money.
As part of a way to trim the national deficit by at least $2.1 trillion, the federal government will no longer pay the interest of graduate loans while the student is still in school beginning July 1, 2012.
“It’s certainly not a good deal if you’re a graduate student,” said Haley Chitty, spokesperson for the National Association of Student Financial Aid Administrators.
The current agreement allows students to start paying interest six months after they’ve completed their program. About $22 billion will be saved over 10 years by charging students earlier, according to the Congressional Budget Office.
There may be a silver lining to the change, however. Elimination of loan subsidies will help correct a shortfall in the federal Pell Grant program, Chitty said.
Pell Grants, given by the government to undergraduate students from low-income families and do not have to be repaid, will not see any changes.
“In that sense, the legislation really protects the cornerstone of the federal student aid program which is the Pell Grant program,” Chitty said.
Lili Vidal, director of CSUN’s Financial Aid and Scholarship Department, was at least happy to have the Pell Grant program saved.
“It’s really the most critical program that we all want to preserve,” she said. “That should be the last thing to go.”
In the 2010-11 school year, Vidal said CSUN paid just under $63 million in Pell Grants to 15,066 students.
That year Stafford Loans, available to both graduate and undergraduate students, were given to 14,389 students at CSUN, totaling over $113 million, she added.
About 3,000 graduate students received $21.5 million in subsidized loans, Vidal said.
Kristin Contreras is beginning CSUN’s two-year graduate history program this fall, while still paying off undergraduate loans from Occidental College.
She said the news regarding graduate student loans was tough to take.
“Now (graduate students) have to start paying (loans) off early,” Contreras said. “But if they’re not able to have sufficient income to cover these loans immediately, it makes it kind of tight.”
Despite the changes, graduate students will still line up for loans because they would not be able to pay for school otherwise, Vidal said.
The big thing for students to do next year is to take better care of their money, she added.
“A lot of students blindly accept what we offer them,” Vidal said. “We have to offer the maximum that they’re eligible for, but they don’t have to accept that.”
Students should live frugally and borrow less if they can, Vidal said.
As for Contreras, she said alternative funding may be the way to go.
“I’m going to have to start receiving scholarships,” she said.