07/16/2012 11:19 am ET Updated Sep 15, 2012

Grace Period on Student Loans Changes

In an effort to keep low-interest rates on student loans, the federal government has changed the guidelines for when to pay back these loans, effective as of last July 1, 2012. According to the Chicago Tribune, undergraduates will face about a $20 billion increase in the cost of these loans, while graduate students will have to pay an estimated $18 billion out-of-pocket within the next decade.

This may force students to re-think their education and current financial plans. As a senior in college, this change radically affects many of my friends' post graduation plans. Several are already, or want to be, enrolled in law school, medical school, or other masters programs upon graduation. Some may now decide to postpone going to graduate school while others may not attend graduate school at all.

Friend, fellow Mount Holyoke College senior, and Uloop editor Kayla Burson expressed concern for paying her undergraduate loans. She stated,

Since I will no longer have an additional six months to pay off my already exorbitant loans before interest starts adding up after graduation, I am definitely going to have to re-think my budget during the school year.  I'm already a pretty frugal person, but I'm going to have to find a way to save even more money in order to pay off these loans.  In addition, in this economy it is already very difficult to find a job, but since I no longer have the extra six months to find a steady job, I may have to settle for a job that doesn't really interest me just because I need the money.  Or, I may have to move back home and continue working at my part-time job because I can't afford to rent an apartment near a job offer and pay off my loans.

Another friend and fellow Mount Holyoke College senior, Anika Gearhart, expressed concern about her financial future, urgency to have a job upon graduation, and change in 2013 summer plans. She previous planned, and still plans, to attend graduate school immediately after college, but instead of traveling for a month after graduating, she now plans on obtaining a job. She also plans to hold at least one job for the duration of her college career in hopes of saving money for graduate school.

Fortunately, I currently do not have undergraduate student loans, but this change in policy may affect my application to business school. Most business schools suggest prospective students have two to seven years of work experience, so I must strategize my payment plan for tuition and meticulously monitor my savings, once I get a job. I, and countless other students contemplating graduate school, will be answering the questions:

• Should I try to save enough to pay graduate school tuition in full?
• Should I take out loans?
• Would my parents be willing to help me out?
• Should I go to graduate school part-time? Or full-time?
• Should I go to graduate school?

Students across America will be weighing their options between getting a job and going to graduate school. For those looking to attend college and continuing their education, many will look to scholarships to fill the financial gap that this policy creates. However, with the slow job recovery rate, some students may discover that keeping a job is more beneficial both financially and for their long-term career than attending graduate school.

Personally, I believe the long-term effects of this policy will change the American education demographic. Although some already believe that college and continuing education is for the wealthy, in light of this change in policy, education after high school will most definitely be for the more affluent. Within the next few decades, we may witness declining numbers in college and continuing education, creating a larger disparity between the haves and the have-nots, changing not only the education demographics but also the labor force demographics. What do you think?

By Allyson Chew, Mount Holyoke College