Bill Restoring Subsidized Federal Student Loans for Graduate Borrowers Reintroduced

Related Topics in the Ref Desk: Graduate students; Direct Loans

By Owen Daugherty, NASFAA Staff Reporter

Graduate students could once again have access to federal student loans with the reintroduction of legislation from Rep. Judy Chu (D-Calif.) which calls for restoring subsidized loan eligibility for those seeking a graduate degree.

The bill, named the Protecting Our Students by Terminating Graduate Rates that Add to Debt (POST GRAD) Act, would once again make graduate students eligible to receive federal Direct Subsidized Loans, which was ended in 2011 by the Budget Control Act.

“Many of the most rewarding and critical jobs in the U.S. require advanced degrees. While we want our best and brightest students to succeed in fields such as healthcare, mental health, and school administration, the high cost of graduate school means that these fields are often just for those who can afford the high tuition or expensive loans. This is unacceptable,” Chu said in a release announcing the bill. “Smart and capable students from disadvantaged backgrounds deserve a shot to earn advanced degrees in jobs that we need filled without taking on a lifetime of debt.”

NASFAA, along with dozens of other associations, supports the legislation. NASFAA has been advocating for graduate students to have eligibility for subsidized federal loans restored since the eligibility was eliminated in 2011 as a cost-saving measure. The bill, which has been introduced several times in the past without passage, has more than 20 co-sponsors in the House.

While graduate students can get student loans through the federal government to pay for their degrees, those loans come with higher interest rates than the ones available to undergraduates. The current interest rates for federal loans first disbursed on or after July 1 for undergraduate Direct Loans are 3.73%, and 5.28% for graduate/professional Direct Unsubsidized Loans.

“This bill will ensure all graduate students, regardless of their or their family’s financial situation, can access Federal Direct Subsidized Loans. These loans do not accrue interest while the student is in school, saving the student thousands of dollars over time. Federal Direct Subsidized Loans are already being used by countless undergraduates, so it’s common sense that we extend this aid to our graduate students,” Chu added. 

Graduate students have seen increased focus from lawmakers in recent years. In addition to the reintroduction of Chu’s legislation, the College Affordability Act (CAA) called for graduate and professional students to have access to the Federal Direct Subsidized Loan Program, though under that bill, only students at public and non-profit institutions would be eligible to borrow.

Additionally, two pieces of legislation recently reintroduced are hoping to provide graduate students who received the federal Pell Grant as undergraduates the ability to apply remaining semesters of Pell eligibility towards their graduate degree.


Publication Date: 7/29/2021

David S | 7/29/2021 3:20:33 PM

A good step (as is the proposal to allow former Pell recipients to use anything they have remaining in Pell eligibility for grad school), and of course as others have suggested, let's do away with the Student Loan Tax (a/k/a the origination fee) once and for all. more negative amortization, which is what makes borrowers (especially those who borrowed for grad school) feel as though they'll be repaying their loans until their grandchildren are in college.

Jaime S | 7/29/2021 2:37:26 PM

This is a welcome change for graduate students, but is not enough. For a population who borrows the most loan dollars and has a good repayment track record, they deserve more competitive interest rates and no origination fees. Many of our students rely on PLUS for the majority of their loans and it pains me to tell them that there is a fee of over 4% on those funds and now over 6% in interest charged on it.

Colleen H | 7/29/2021 11:28:30 AM

Would be great is they addressed eliminating originating fees and lowering the interest rates in general too.

Garnet T | 7/29/2021 9:13:51 AM

Outstanding news!!!

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