How Policy Impacts Students Lives: Unsubsidized Federal Loans

How Policy Impacts My Life

The Discontinuation of Federally Subsidized Loans for Graduate Students

Travis D. Jurdem

Metropolitan State University MSW Program

Abstract

This paper will discuss the Micro, Mezzo, and Macro effects of the discontinuation of federally subsidized Stafford loans for graduate students. This year graduate students have seen a drastic change in the interest rates for their federal student loans. As a graduate, student we have seen the interest rate for our student loans nearly double this year. This policy change has certain micro, mezzo, and macro implications.

When I voted for President Obama close to four years ago, one of his major selling points was promising more funding for federal student loans or Stafford Loans. Staffordloan.com, explains that Stafford loans are: "federal student loans made available to college and university students to supplement personal and family resources, scholarships, grants, and work-study." StaffordLoan.com shows how Stafford loans are placed in two different categories; government subsidized, or non-subsidized. The difference between these two divisions is huge and mainly monetary. A subsidized Stafford loan has an interest rate of 3.4 percent where a non-subsidized Stafford loan has the interest rate of 6.8 percent (Staffordloan.com). Well needless to say I was quite troubled when I heard about the change in policy for subsidized Stafford Loans that started this year.

"Graduate students are no longer eligible for government-subsidized Stafford loans. Grad students can still take out unsubsidized Stafford loans, for which interest accrues at a rate of 6.8 percent during school (Hopkins, 2012, p. 1)." How does this new change in policy impact the different systems in my life? This change impacts my life or my micro system pretty drastically. This policy change affects my family or mezzo system in a huge way. This policy also has large macro impacts as well.

I originally had planned on taking out a federally subsidized Stafford loan to help finance my graduate school education at a 3.4 percent interest rate. Doubling my expected interest rate to 6.8 percent has a pretty giant impact on my micro system. This means that I will be paying double the interest; this means that I have had to rethink my finances for the next couple of years. This policy made me rethink the pros and cons of getting a federal student loan because of the huge increase in interest payments. This policy change created a large amount of stress for me because I had already come up with my budget and a plan on how I would be paying off my federal loans. Now I had to re-plan, re-budget, and re-think many aspects of my life including trying to find a better alternative to a non-subsidized federal loan.

The change in policy had such a drastic impact on my micro system that it also rippled out into my mezzo system. First, the stress that I was feeling was also felt by my mother, father, sister, and girlfriend. The waves I had created in my personal life were splashing over onto my loved ones. Second, my family was hugely impacted because my father and I realized