The End of Federally Subsidized Student Loans?

Libby Nelson:

The proposal would end the subsidized Stafford loan program, in which the federal government pays the interest that accrues while students are enrolled in school. It's an idea that has gained some traction: it was previously embraced by the bipartisan federal debt commission, the College Board's Rethinking Student Aid panel, and even (in a limited way) by President Obama, who, in his 2012 budget proposal, called for ending subsidized interest payments on graduate student loans and need-based Perkins loans. But Obama and the College Board panel recommended using the savings from the subsidies to expand financial aid for needy students, rather than to pay down the deficit as Cantor's plan and the debt commission's would.
Whether the proposal, which was first reported Tuesday by the news website The Daily Beast, will make it into the final compromise is still unclear; President Obama reportedly opposed it, and there's no evidence that a consensus will emerge anytime soon. But the possibility of ending the subsidized Stafford loan program drew immediate fire from student advocates, who argued that it would transfer debt from the federal government to needy students.

Posted by jimz at July 13, 2011 11:48 AM
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