Student Loan In-School Interest Exemption ALERT!!! (fwd)

[John J. Ronald]

---------- Forwarded message ----------
Date: Sun, 22 Jan 1995 19:51:30 -0700
From: Shelley Reid <SREID at UWYO.EDU>
To: Multiple recipients of list E-GRAD
     <E-GRAD%RUTVM1.BITNET at ricevm1.rice.edu>
Subject: Student Loan In-School Interest Exemption ALERT!!! (fwd)

PLEASE FORWARD THIS TO AS MANY STUDENTS, FACULTY, AND ADMINISTRATORS
AS POSSIBLE:

CONGRESS THREATENS TO CUT GRADUATE/ PROFESSIONAL STUDENT AID BY 9.6
BILLION OVER THE NEXT FIVE YEARS!  PROPOSED CUTS WOULD INCREASE
GRADUATE/PROFESSIONAL STUDENT INDEBTEDNESS BY UP TO 50 PERCENT,
RESULTING IN THE LARGEST COST INCREASE IN GRADUATE/PROFESSIONAL
EDUCATION IN U.S. HISTORY!


TO:    Graduate/Law/Health Professions Students

FROM:  Tony Rosati, Information Exchange Coordinator
       National Association of Graduate-Professional Students
       ROSATI at GUSUN.GEORGETOWN.EDU
DATE:  23 January 1995


As part of its federal budget reduction discussion, Congress is
considering eliminating the in-school interest exemption for
undergraduate and graduate/professional student loans.

Currently, the federal government pays the interest accrued while
students are enrolled,  and for the first six months after they
graduate.  Proposals under consideration by Congress would add this
additional interest to students' loan principal, which could increase
graduate/professional student indebtedness by up to 50 percent.

THIS WOULD RESULT IN THE LARGEST INCREASE IN THE COST OF GRADUATE
AND PROFESSIONAL EDUCATION IN THE NATION'S HISTORY.

Eliminating the interest exemption has a greater negative effect on
students the longer they stay in school, and as such most severely
affects graduate and professional-degree-seeking students.  For example,
Student A attends school for four years to earn a bachelor's degree
and attends graduate school for an additional two years to earn a M.A.
degree.  Upon graduation, this student would owe $34,125. If the
interest exemption is eliminated, the student would owe an additional
$9,167, or a total of $43,292.  This represents a 27 percent increase
in educational indebtedness, increasing monthly payments from $409 to
$520.  The extra cost over the life of the loan would come to about
$14,000.

Student B receives a four-year undergraduate degree and then spends
six years earning a PhD in engineering.  This student would owe $68,125
in the cost of loans and an additional $33,028 if the interest is charged.
This 48 percent increase in educational debt would leave the student
owing $101,153 at the start of repayment.  This student's monthly
repayment would increase from $818 to $1,214 as a result of eliminating
the interest exemption.  The extra cost over the life of the loan would
be about $48,000.

WHAT CAN YOU DO?  CALL YOUR MEMBER OF CONGRESS IMMEDIATELY!!!

The Alliance to Save Student Aid, a group of 29 national organizations
representing undergraduate, graduate, and professional education, have
set up the "SAVE STUDENT AID HOTLINE."  By dialing 1-800-574-4AID, you
will be connected with the Washington, DC office of your Member of
Congress.  The first 250 calls are free.  After that, a $3.65 charge
will be billed to your major credit card for each call.

WE ALSO URGE YOU TO WRITE YOUR MEMBER OF CONGRESS.  A SAMPLE LETTER,
WHICH SHOULD BE ADAPTED TO YOUR OWN PERSONAL AND CAMPUS SITUATION,
FOLLOWS:

The Honorable (name of Representative)
U.S. House of Representatives
Washington, DC  20515

Dear Representative X:

I am a (graduate/law/medical) student at (your institution) and a
registered voter in (your state).  I am active with (your graduate
student government organization) and the National Association of
Graduate-Professional Students (NAGPS).  I am concerned that despite
the obvious benefits of postbaccalaureate education, Congress is
proposing cuts which would result in the largest increase in the
cost of graduate/professional education in history.  Specifically,
Congress is considering eliminating the in-school interest exemption
feature of the federal student loan program.

Eliminating the interest exemption has a greater negative impact on
students the longer they stay in school, and as such most severely
affects graduate and professional-degree-seeking students.  For
example, a student with four years of undergraduate borrowing and two
additional years of borrowing in a MA program would owe an additional
$9,167 to the $34,125 which would be owed under current law (a 27
percent increase).  A borrower with a four year undergraduate degree
who goes on to spend six years earning a Ph.D. in Engineering would
owe an additional $33,028, which would be added to the $68,125 in loan
costs under current law (a 48 percent increase).

Due to the soaring costs of tuition and to reductions in federal, state
and institutional support of post-baccalaureate education, student loans
are becoming more and more important as a means of financing advanced
degrees.  Recent statistics indicate that borrowing among graduate and
professional-degree students has increased by 49 percent since 1992.

Although I wholeheartedly support responsible federal deficit reduction
efforts, cutting aid to graduate and professional students will cost
U.S. taxpayers.  Eliminating the in-school interest exemption would act
as a significant disincentive to individuals who are considering
obtaining advanced degrees.  Statistics prove that graduate/professional
student aid more than pays for itself by stimulating economic growth,
expanding the tax base and increasing productivity.  In order to maintain
its global competitiveness and ensure its long-term economic growth,
America needs to forward, rather than undermine, its investment in
education beyond the baccalaureate.

Sincerely,

(your name)

PLEASE FEEL FREE TO CONTACT NAGPS AT (708) 256-1562 WITH QUESTIONS OR
FOR FURTHER INFORMATION.
#==================================================================#
| Tony Rosati            | NAGPS Information Exchange Coordinator  |
| Dept. Chemistry        | NAGPS Board of Directors, 1992-1995     |
| Georgetown University  | Owner & Admin, T-ASSIST Discussion List |
| Washington, DC 20057   |                                         |
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|  NAGPS WWW Page > http://access.digex.net/~rosati/nagps-hp.html  |
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