Local colleges are starting a new school year, but they have less than a year to prepare for a big change that some students haven't even heard about yet.
Earlier this month, the national debt ceiling deal included eliminating some graduate school loans in order to fund the Pell Grant program for low-income students.
Starting July 1, 2012, federal subsidized loans for graduate students will be cut. That means the loan interest that the government used to pay will be added to the student's tab. It's supposed to save at least $18 billion over the next decade, but financial aid offices at local colleges worry about the impact it will have.
"These students are working hard going back to school, they're trying to prove themselves and improve us as a nation, and a lot of them aren't going to be able to afford to do that now. And that's a shame," says Jackie LaTorella, director of financial aid at the University of Tampa.
All loans signed off on before next July will be exempt from the change, and students will not see a reduction in the amount of money they're allowed to borrow.
About a third of graduate students nationwide took out subsidized loans to cover the 2007-2008 school year, according to the National Center for Education Statistics. LaTorella says the change could affect 300 students at UT alone.
"We just don't want students to be surprised when they're out and they get their bill and they had all this loan money that wasn't subsidized," says Billie Jo Hamilton, director of University Scholarships and Financial Aid Services at the University of South Florida. "It's a singular change, but not insignificant."
According to Hamilton and LaTorella, the elimination of subsidized loans could affect students very differently, depending on how much money they borrow and how long it takes to pay back. On the low end, the additional cost could be about as much as the price one latte a week. Other students, especially those who also use their loans for living expenses, could see a $6,000 increase over the course of a loan.
"I'm really glad that [the government] expects to be able to fund Pell Grants for our neediest students for next year," LaTorella says. "But it is really a hardship on the graduate students."