Losing subsidized Stafford Loans could seriously harm the graduate students who depend on the funding source for their education, higher-education officials say.
The federal loans are just one of the higher-education funding sources, along with Pell Grants, that are on the chopping block for the next fiscal year as Congress and President Obama debate on how to balance the budget.
During the last academic year, 7,700 University of Iowa professional and graduate students received $58 million in Stafford Loans — a form of funding in which the federal government guarantees a certain interest rate on the loans. Students who receive subsidized Stafford Loans don’t have to pay interest on the years they are enrolled in school or for a certain period of time after graduation. The federal government subsidized approximately $5.9 million in loans for UI students.
That leaves students paying roughly $500 in interest yearly, said John Keller, the dean of the Graduate College.
Cuts to Stafford Loans would hit graduate students particularly hard because many lack the support system undergraduates have.
"If I couldn’t have gotten these loans, it would have been very hard for me to go to graduate school," said UI graduate student Kristi DiClemente.
The fifth-year Ph.D. student said she has accumulated roughly $60,000 in loans and $50,000 in subsidies.
And though moves such as 100 percent tuition relief at the UI help graduate students, they are still left paying extras, such as research fees. And many graduate students also have responsibilities undergraduates don’t, such as raising a family and paying rent.
"We’re not in the same place [in life] as undergraduates," she said. "I’m 31, I can’t go home and live with my mom. Unless things were really bad."
Still, cutting the loans could save $2.2 billion annually, according to the Department of Education budget for fiscal 2012.
"We should not be cutting the things that are the foundation of the future," said Patricia McAllister, the vice president of government relations and external affairs for the Council of Graduate Schools.
She said educators feel the importance of the loans is built on providing better education.
But one expert said subsidies make up a small portion of loans and said no evidence points to any change that would affect graduate students’ decisions about school. Students still have to pay back loans, said Sandy Baum, a senior fellow at the George Washington School of Education.
"Graduate students, to be honest, are not in the worst situation," Baum said. "They all have bachelor’s degrees and a good education."
Deans from across the nation are reaching out to legislators to come up with better ways to deal with cuts and maintain subsidized loans. Those include limiting the number of years a student can receive subsidized loans and shorten the grace period to pay back the loans.
The pending cut comes at a time when other programs in graduate education are teetering on the edge of more cuts as well.
"If this keeps happening, what things are we not going to keep doing?" Keller said.