|Student Loan Deal Comes Just in Time
Negotiators in Congress announced this week that a bipartisan deal on extending the subsidized Stafford loan rate had been forged. At press time, both the House and the Senate were expected to pass the measure later today. The legislation must be passed by Congress and be on President Obama’s desk by the weekend to meet the July 1 deadline or the loan rate will double.
Our appreciation goes out to Connecticut’s Congressional delegation which has been working hard on this issue. Congressman Joe Courtney was one of the first in the country to file legislation that would permanently extend the 3.4% interest rate on subsidized Stafford loans. This action will save the 73,718 Stafford loan borrowers in Connecticut an average of about $1000 per borrower.
While both Democrats and Republicans have supported keeping interest rates on student loans at the current 3.4 percent, they have disagreed on how to pay for it. The $6.7 billion agreement would extend the current 3.4 percent rate on Stafford loans for one year. Most of the cost of the extension will be funded by two changes in the pension system. The rest of the savings will come from changes in the loan program that will limit how long a student may secure such a loan and which degrees may be paid for with the loan.
Some context as noted in the "State of Young America” report on higher education and this week's Graph of the Week:
- Students will be only be able to receive the subsidized Stafford loan for up to 150% of the average time it takes to complete an undergraduate degree. Currently there are no limits. This means that a student earning a four-year bachelor’s degree would be eligible for subsidized Stafford loans for up to six years while a student in a two year program is eligible for only three years. Students who are still in school after this period will still have access to the higher interest rate unsubsidized Stafford loan or a private loan.
- Subsidized loans will not be available to graduate students who will face a significant new debt burden. The interest rate on graduate loans will remain at 6.8 percent. Additionally, as passed previously by Congress, as of July 1, students pursuing advanced degrees will no longer qualify for the in-school interest subsidy on Stafford loans and will have to pay interest on their loans while they are enrolled or collateralize it over the life of the loan, adding to their debt. Graduate students also will no longer be eligible for special incentives for repaying their loans on time. One third of total student loan debt is for graduate study.
- Among 4-year college students, nearly half (46 percent) work more than 20 hours per week, up from 39% in 1986.
- Federal financial aid has shifted from a grant based to a loan-based system. Today, 36% of all federal aid is grant-based, down from 55% in 1980.
- In 1980, the maximum Pell grant covered 69% of the costs of a 4-year public college, including room and board. Today, it covers 34%.
- Today, two out of three students graduate with student debt, up from one out of three in 1992. The average student graduates with over $24,000 in student loan debt.
Graph of the Week
Students at both public and private non-profit universities in Connecticut rely on Federal Student Loans as a piece of their financial aid package.
On Campus Life
Higher Education Headlines
||Annual Report on State Student Grant and Aid Programs Released
The National Association of State Student Grant and Aid Programs annually examines how states have distributed financial aid to students. This year’s report, which looks at the 2010-11 academic year, found that states provided about $11 billion in aid that year, up from $10.8 billion the previous year.
||Follow the Money
Public colleges must do a better job of measuring their efficiency and quality, said an affiliate of the U.S. Chamber of Commerce, which released a report that grades states on the "bang for the buck" of their higher education systems. The report, dubbed Leaders and Laggards, seeks to provide a detailed data analysis of performance of higher education in each state.
||Senate Reaches Deal on Loans
Senate leaders said Tuesday afternoon that they had agreed on a compromise to keep the rate at 3.4 percent for another year.
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Graph of the Week
On Campus Life
Higher Education Headlines
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Jessie Mehrhoff, ‘14
Environmental Studies & Economics
Last year after my father passed away, my mother and I experienced a financial shock that had me terrified that I would be unable to return to Connecticut College. Though it was only my second semester, I had fallen in love with the school and was already getting involved in both my majors and extracurricular activities. Without financial aid, I most likely would have had to transfer to a college that could not fulfill my academic needs as well as Connecticut does. When opening up my financial aid award for this year, I was shaking for fear that I would not have the financial means to return, but I was pleasantly surprised when seeing how much the school was able to offer me. Through work study money and what I was able to save over the summer, I am financially sufficient during the year as well. Financial aid motivates me to work extra hard in my classes, as I know that Connecticut College truly values excellent students.
I originally chose Connecticut College because of its small size and environmental program, and now that I am a first semester sophomore, I am positive that I made the right choice! Connecticut College’s combination of academic rigor and student involvement outside the classroom make it the perfect college for me.