Just How Much Money Are We Talking About?
This has been dismissed as being a small chunk of change compared with the average debt a graduate student takes on while in school. But is it really? Sure, killing the Stafford Subsidized Loans has cut $21 billion dollars and made that money available for another worthy cause—undergraduate students needing Pell grants. However, it is also estimated that it will cost students $18.1 billion over ten years. Ouch.
Each graduate student can take out up to $20,500. Typically, $8,500 is made up of the subsidized loans. While schools say that students finish MA programs in two years and Ph.D. programs in five years, the average student takes about four years to complete an MA and eight to ten years to complete a Ph.D. That's after the bachelor's degree. That means students can have anywhere from $41,000 to upwards of $138,500 (the government limit on loans, or $224,000 for certain students in specific programs) or more in student loans upon completion. And that's not counting private loans or credit card debt.
Up to $65,500 of that can be from subsidized loans. Guess what, that's a LOT of interest. Yes, one might argue that it's only paid for the student on $8500 a year, but when you add that up and in with the rest of the loans...one can understand why in the film Reality Bites Janeane Garofalo says, "I'm going to be dodging my student loan officer for the rest of my life." Each student will be paying interest on the full $20,500 compounded. Also realize that you'll be paying about 1% in fees for your student loans.
For a student who takes out the maximum in loans over 6 years in a PhD program, the interest accrued will be $25,000 that the government would have paid. Some might say that it's a small part of the some $60,000 all together in interest that would accrue over the time the student is in school.