The sequester is underway and that means across the board budget cuts of domestic programs including the military and education. What does that mean for Americans? Everyone has to be a little more tight with their money as the government will not be assisting as easily as before. Students are being effected as well with cuts on financial aid programs and rise in loan fees.
Both graduate students and parents of undergrads have been receiving letters notifying them on the recent increase in fees on the Direct PLUS loans as a result of the automatic budget cuts.
On August 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as the 'sequester'. While this law does not otherwise change the amount or terms or conditions of your Direct Loan, it does raise loan fees on Direct PLUS Loans first disbursed after March 1, 2013.The fee on the loan will increase from 4.0 percent to 4.204 percent. For example, the fee on a $10,000 PLUS loan will increase by $20.40 from $400.00 to $420.40. This increase is small, but has a huge impact on families who have a hard time funding for secondary education.In this upcoming academic year, students will also be effected by the 5 percent cut in funding for federal work study and supplemental education programs. Students will have to include these effects in their decision to attend school. Student debt has reached $1 trillion with 13 percent defaulting on the loans.
Funding your education is becoming harder in this current economic situation Many have to decide if the investment is worth it. With so many going into student debt, it becomes harder to decide that college is right for you. When you are considering furthering your education, weigh both sides. On one hand, college is an opportunity for personal and professional growth and is great for networking, but also costly. Many are moving towards entrepreneurship to build companies without an education. What would your choice be if you could go back? Let us know at broke2dope@gmail.com or tweet us @broke2dope.
Shanika Simmons
