As a graduate student, I will gladly sacrifice and have a little higher interest rate on my part if it means more money is available for Pell grants. Those matter way more than any personal concern of mine, loan-wise.

As a financial aid administrator who has worked with graduate and undergraduate students, I reject the attempt to define this issue in terms of graduate students versus undergraduate students. In the bigger picture, the bottom line is that students and taxpayers will be the "winners." The biggest "losers" in this legislation will be the lenders, but I use the term "losers" loosely since I predict that those lenders who remain in the student loan arena (which I predict will stay at a high number)will continue to profit, although perhaps at a lesser rate than is currently the case. The lenders are an important partner in the financial aid process, and I do not wish to diminish their importance and the value of their services. However, the time has come to re-calibrate the balance between lender interests and student and taxpayer interests, and I believe this legislation accomplishes a balance. When Democrats and Republicans, including a conservative Republican President, agree that lenders can afford reduced subsidies, I think they are probably right.

The point that T.H.E. is trying to make, which may or may not be accurate, is that while this legislation may or may not reduce the up-front cost of educational borrowing by reducing the current fixed interest rate, it will have the subsequent result of raising the effective cost of borrowing during repayment, because as it currently is, lenders attempt to lure borrowers with incentives in the form of rebates or interest rate reductions, which would be proportionately reduced by a reduction in the currently lucrative government loan subsidies and guarantees.

Nonetheless, I personally support this legislation, because while it may reduce lender's incentives, such incentives tend to be rather ethereal in reality, as the vast majority of borrowers are never eligible for most of them (with the notable exception of T.H.E.'s incentive, which doesn't have any of the nearly impossible restrictions that most other lenders impose on theirs). So while it will raise the costs for some of the more responsible borrowers, it will have the effect of leveling the loan-repayment playing field and save taxpayers billions of dollars - which, of course, Congress will promptly spend on some other worthless beaurocratic money-pit. But that's another discussion for another day...

As reported by this service, the subsidy will be cut such that .55% of the interest rate will not be funded by the government anymore. For rates that are above 8% now, it is pretty ridiculous for any lender to claim that they will be FORCED to raise rates. They are already making huge amounts of money off of the loans even without the subsidies. Ever heard of unsubsidized stafford loans? Or the ever popular "Grad Plus" loan. At the end of the day, no lender can blame the government for forcing them to raise rates in this case. They are already making tons of money, will make tons of money without the added subsidy and could simply chose to make a little bit less. If THE and other lenders were really interested in helping students, they wouldn't raise rates when it is obvious that they will still profit off of the loans even without the subsidy in question. I think that it is reprehensible for any lender to blame the government for refusing to give handouts to an industry that never made a loss in history and continues to be one of the most profitable industries in the nation and world.

I think that the government should in fact create their own loan program, not just subsidizing loans but also providing unsubsidized loans, with money going directly from the gov't to the students and hopefully ending the reign of private lenders whose only goal is to make as much money as they can, not to help students or ensure that education is available to every American.