COLUMBIA — The Budget Control Act may have averted a national financial meltdown, but soon graduate and professional students may face a financial challenge of their own.
Part of the reduction in government spending included in the legislation comes from eliminating subsidized student loans for graduate and professional students. The cut to those loans takes effect July 1 of next year.
The money saved from the cut is primarily being used to help fund Pell Grants, which provide financial aid to students who might not otherwise be able to attend college.
Graduate and professional students will still be able to take out the same total amount of money in loans, but the money will have to be taken as unsubsidized loans.
Subsidized loans are those in which the interest is paid by the government while the students are in school. Unsubsidized loans accrue interest normally, but students aren't required to start making payments on the loans until they've completed their schooling, though they can choose to start paying early.
This means students will have to pay more money back after they graduate because the government is not paying interest on their loans while they are in school.
Erica Thieman, a graduate student and president of the Graduate Student Association at MU, was upset by the news. When she left her high school teaching job to go to graduate school, she took a 75 percent pay cut and planned out her finances so that she only had to use the subsidized loans.
Thieman said that after the subsidized loans end in 2012, she will have only one year left on her degree and can probably "make it work." But she was still trying to figure out how.
Sarah Shear, another MU graduate student, used private loans, not government loans, to fund her master's degree but said she sympathized with with those affected. She's currently living on graduate stipends and support from her parents to complete her doctorate.
Shear said the few graduate students she's talked about the cuts with have expressed a combination of frustration and fear.
Nick Prewett, the interim director of financial aid for MU, said he didn't think the change would make a large difference to graduate student enrollment. He said anyone who was seriously intending to go to graduate school before the legislation was passed is probably still planning to do so, though he acknowledged it might deter a few who are on the fence.
But Theiman said she wasn't sure she would have decided to attend if the subsidized loans hadn't been an option.