Student dupe van Obama’s compromis staatsschuld

Nieuws | de redactie
3 augustus 2011 | De staatsschuld verkleinen door studenten dieper in de schulden te steken. Dat is een van de uitkomsten van het akkoord dat Obama heeft gesloten met de Republikeinen. De VS betalen niet langer de rente op non-staatsleningen voor onderwijs. Obama wist wel de voor hem zeer belangrijke Pell Grants te behouden.

After weeks of Republicans and Democrats clashing in Congress,U.S. President Barack Obama signed off a $2,1 trillion debtreduction plan this Tuesday. From next year on, this newlegislation will also impact U.S. students who take out loans (anaverage US-student has $24.000 in debt). Especially those whoborrow non-governmental funds will see their debt increase by acouple of thousand dollars.

$11.178 extra in interest

During their four years of studies, students are able to takeout federal loans to a maximum of $138.500 with an additional$65.000 from subsidized loans. Approximately 8 million studentsfurther qualify for Pell Grantsof up to $5.500 a year in case their family is below a certainincome level.

A subsidized loan meant that students would borrow money whilethe government paid any interest that accrued during their studiesand 6 months after graduation. From July 2012 on, this support willbe scrapped.

With the new austerity measures in place, the $125 billion worthsubsidized student loan market will be turned into an unsubsidizedone. For a student who takes out the maximum of $65.000, this meansthat he will owe $207 in interest per month, accumulating over theyears to an extra of $11.178 to be paid in interest.

Compromise to save Pell Grants

Together with a number of other tweaks to the student loansystem, this will save the government $22 billion over the next 10years. Most of this money will be shifted towards the funding ofPell Grants.

Republicans wanted to cut these grants for a while now. Withthese measures, Obama reached a compromise shifting the burden tofinance these grants towards the broader bulk of students who takeout formerly subsidized loans.

Further analysis on ScienceGuide of the debt limit deal byUvT lecturer Sylvester Eijffinger here (in Dutch)

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