Graduate Student Aid
In recent years, federal support for graduate education has declined. In many instances, these benefit cuts have had an adverse impact on student debt.
Currently, graduate students may borrow Stafford Unsubsidized Loans and Graduate PLUS Loans. New graduate students became ineligible for Perkins Loans beginning in the 2016-17 academic year. Graduate students receiving a Perkins Loan as of September 30, 2016, remain eligible for AY 2016-17. They are also eligible for income-driven repayment plans (see Student Loans issue brief) and loan forgiveness for public service after a specified number of years of repayment.
The Budget Control Act of 2011 (Public Law 112-28, Sec. 502) eliminated the in-school interest subsidy (ISIS) for graduate students, who must now pay or accrue interest on both their undergraduate and graduate loans while they are in graduate or professional school. Legislation was introduced in the 114th Congress to restore ISIS for graduate students. The interest rate on unsubsidized loans for graduate students is higher than the rate for undergraduates. While graduate students have access to additional borrowing limits through Graduate PLUS loans, the interest rate and the fees on those loans are considerably higher than that for unsubsidized loans. The Revised Pay As You Earn (REPAYE), open to all Direct Loan borrowers, provides loan forgiveness for undergraduates after 20 years, and for borrowers with any graduate loans after 25 years.
The situation for graduate education could become even worse. For example, in the 114th Congress, Senator Lamar Alexander (R-TN), Chair of the Senate HELP Committee, proposed reducing annual borrowing limits for graduate students. This could resurface in the 115th Congress.