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Student Loan Changes

last modified 2011-11-04 01:53 PM

Changes are being made to the federal student loan program as the U.S. government wrestles with a growing deficit and budget cuts. Graduate students who apply for government-backed student loans in time for the loans to be disbursed before July 1, 2012, are still eligible to receive both subsidized loans and unsubsidized loans. For loans disbursed after July 1, 2012, only unsubsidized loans will be available. What does this mean?

Subsidized federal student loans
Students who qualify for these loans based on their FAFSA can receive up to $8,500, subject to the cost of attendance limitations, at 3.4% interest. The federal government pays the interest that accrues on these loans while the students are in school.

Unsubsidized federal student loans
Students who do not qualify for subsidized loans may still qualify for unsubsidized loans based on their FAFSA. Such students may borrow a maximum of $20,500, subject to the cost of attendance limitations, at 6.8% interest. Interest accrues while the student is in school, and students begin paying back all principle and accrued interest when they are no longer in school. The student pays all accrued interest.

After July 1, 2012, graduate students may only apply for unsubsidized loans.

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