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Federal student loans come with a lot of strings connected. For all the strings, though, the loans are intended to help encourage education and advanced degrees. As of 2012, however, graduate loans will no longer have their interest subsidized, which will shift responsibility for paying $18.1 billion over 10 years to students. Source for this article: Graduate student loans to lose interest subsidy

The interest shift

In the last few years, Congress has made several brand new debt deals. A limit on student loan debt was one of those things negotiated. Graduate loans will lose their subsidized status, meaning that the loans will accrue interest while the student is in school, and the student will be responsible for that interest. What pupils turn out to be responsible for will change although the deal will not change borrowing limitations.

The cost to students

It can cost a lot to borrow money for school as a graduate student. A student could end up paying $200 a month in just interest payments if they borrow the full amount. During schooling before this, the government would normally have paid the interest up to six months after graduation. Also, with the deal made, the student credit was taken away. This credit at first was given to pupils that would pay without missing a payment for 12 months.

Debt gaps found

A change in loans could make a massive difference. The gap problem between older and younger Americans might get wider. The gap between older and younger generations is getting bigger even though it has always been there. Somebody 65 years or older will have 47 times as much of a net worth compared to someone 35 years or younger. That number was much smaller 25 years ago. It was only 10 times more worth. The bad job industry and student loan indebtedness are reasons why the disparity exists. The gap is going to get even worse than this. That is because Congress is increasing how much a student has to pay with student loans.

Information from

Mint.com

CNN Money

The Fresh Xpress

CBS News