Current or new graduate student should be aware that the terms for federal student loans to graduate students have changed. If you are taking out new student loans for the 2012-2013 academic year, the following change may affect your financial aid package.

Effective July 1, graduate and professional students are no longer eligible for Direct Subsidized Stafford loans. This change will affect all loans made for periods of enrollment that begin on or after July 1, 2012.  Graduate students are still eligible to borrow up to $20,500 annually in Federal Direct Loans; however, all of the loan amount will be in Direct Unsubsidized Loans. The Federal Government will charge the borrower a 1% origination fee.

What’s the difference between subsidized and unsubsidized loans? According to USAFunds.org, the federal government pays the interest on subsidized loans that accumulates while a borrower is in school at least half time. On unsubsidized loans, borrowers are responsible for the interest that accumulates from the date the loan is made, even while the student is in school.  The borrower is not required to make interest or principle payments until 6 months after graduation or the student falls below half-time status.

To estimate your monthly loan payments after graduation, you can use the FinAid.org loan calculator here. Simply enter in your loan information and the calculator will create a payment schedule for you. You can enter a shorter repayment term to find out how much higher your monthly payment will be to pay off the loan faster.

If you have any questions about the graduate Stafford loan changes, please contact Financial Aid at 518-458-5464.