The bipartisan student loan bill tying interest rates to the financial market is not sitting well with graduate students, Reuters reported.
The bill lowers the interest rates of federal student loans for now, but some are skeptical that they are headed for an impending spike. Tying interest rates to the financial market is designed to keep them low while the economy is hurting, but bring them back up when the economy improves, as it is expected to.
The bill represents a compromise between Democrats and Republicans on a hotly debated issue. Republicans got what they wanted in synching the federal loan interest rates with the financial market, but the other part of the compromise is they have to remain the same throughout the academic year.
This year, rates for graduate students fell from 6.8 percent to 5.4 percent. Even though the bill caps the rates as 9.5 percent being the highest it could climb, one graduate student said she feels uneasy about interest rates possibly climbing while she is enrolled.
Christina Stam started her first year as a graduate student at Georgetown University's law school by borrowing $30,000. After two more years, when she finishes, that would be $90,000 before interest and if the rates were to climb, she could end up owing a whole lot more.
"I would hate for that to happen. I'm married. I can't ask my parents for money," Stam said.
The rates, and the cap for those rates, are lower for undergraduate students at 3.9 percent with the highest allowed at 8.25 percent. This has graduate students calling the bill unfair.
Meredith Niles, director of legislative affairs at the National Association of Graduate-Professional Students (NAGPS), said the bill seems unfair to graduate students.
"There has been a large focus on undergraduate education - which we support - but it definitely feels like there has been a marginalizing of graduate students in terms of student loans," she said. "Over the long term, it's going to be a disaster."
Graduate students groups want legislation capping their interest rates at 6.8 percent and are asking for a lower cap because they are more often "non-traditional students." Graduate students are more likely to be married, have children and/or their own living accommodations. It is not clear if the legislation will gain much traction because lawmakers behind the bipartisan bill said the compromise was meant to encourage at least an undergraduate degree. One senior Republican aide simply said graduate students got the raw end of the compromise.
"This was a result of a compromise, a negotiation," the aide said. "There are winners and losers."
Still, graduate students are often burdened by undergraduate loans on top of other financial responsibilities.
"Unlike undergraduates, we're no longer dependent on our parents," said Niles, a PhD candidate at University of California-Davis. "When we see these higher rates, it's not just students it affects. It affects families."
