Although we know that the so-called Budget Control Act will hit us with massive cuts, everyone's been left in a game of 20 Questions trying to figure out just where the slicing and dicing will occur. Except for one, oddly specific directive. If you -- or your children -- are about to head off to become a doctor, lawyer, or get any sort of graduate degree, Congress has already delivered the bad news: Starting next summer, you'll pay a lot more to go.
Under the new deal, the government will no longer subsidize the popular federal student loan, the Stafford, for graduate school. As a result, a typical borrower could pay an additional $7,000 in interest on federal student loan debt, estimates Mark Kantrowitz, who runs the invaluable student aid website FinAid.org.
Young people today have graduated into the worst economy since their grandparents (and in some cases, great grandparents) were their age. They have trouble finding jobs, and on top of that, they're dealing with enormous debt from undergraduate student loans. It's no wonder a record number of grads are moving back home with their parents, just to get by.
Not surprisingly, many have decided to play the grad-school card. More than one in four college graduates -- or about 27 percent -- opted for graduate school rather than face the dismal employment market, according to a survey of 2010 grads by the National Association of Colleges and Employers. The unemployment statistics support this logic, as more education correlates with high employment, according to the U.S. Department of Labor.
Despite this reality, Congress felt it the right time to hit students where it hurts the most: their wallets. Lest you think that these will be the only cuts to the academic world, think again. By November 23, lawmakers will have to trim $2 trillion from the budget, and other financial aid programs and grants are likely to land on the chopping block. Now, more than ever before, it's time to be vigilant about financing your education.
Here's how to save money on grad school:
- Be sure you need to go. Could you gain the experience by working at a different company? Volunteering? Taking professional development courses? Ask yourself: Am I completely sold on this career path, or would it be smarter to test the waters with an internship? Obviously, if your aim is to become a dentist, you need grad school, but if you're dreaming of writing the Great American Novel, it might not be necessary.
And finally, let your congressperson know that you don't want to see federal funding for education cut one more penny. Call, email, tweet, write it in the sky if you have to: Preserve the money to help every American get a better education.
Beth Kobliner is a personal finance commentator and journalist, the author of the New York Times bestseller "Get a Financial Life: Personal Finance in Your Twenties and Thirties," and a member of the President's Advisory Council on Financial Capability. Visit her at bethkobliner.com, follow her on Twitter, and fan her on Facebook.