The federal government provides grants and loans to graduate students, but this support has been on the decline in the past decade.
To begin with, graduate students pay higher interest rates on student loans than undergraduates. Then in 2012, the government eliminated the subsidy for federal graduate student loans, meaning interest begins to accrue from the time the loan is disbursed. Graduate students also lost eligibility for campus-based Perkins loans, which provided lower interest rates and cancellation options for public service until Congress allowed it to expire in September 2017.
The government also has cut funding for federal grant programs that support areas of study for graduate students, including the Jacob K. Javits Fellowship Program, which supports fellowships in the humanities, and the Graduate Assistance in Areas of National Need (GAANN) program, which supports grants in science, technology, engineering, and mathematics (STEM) fields and other areas of national need.
Developments in the 115th Congress (2016-18)
The House PROSPER Act
The PROSPER Act continued the recent trend of cutting federal support for graduate students by eliminating eligibility for Federal Work-Study (FWS), eliminating graduate PLUS loans, capping graduate loan limits, and eliminating Public Service Loan Forgiveness (PSLF).
Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need
It is available to full-time and part-time students. In 2016-17, over 619,000 students benefited from $990 million appropriated to FWS in FY 2017.
Graduate PLUS loans provide federal student loans up to the cost of attendance for qualified borrowers
The House PROSPER Act set an annual limit for Graduate ONE loans of $28,500 with an aggregate cap of $150,000 (including undergraduate loans). Given these new limits on federal student loans, graduate students would have needed to borrow in the private loan market at greater cost and with less favorable terms. This chart illustrates the current federal Stafford Direct Loan limits and the new proposed federal ONE Loan limits. (Current limits that would have been struck under the House PROSPER Act are struck through. New loan limits are illustrated in black text. Click to enlarge.)
Public Service Loan Forgiveness forgives the balance of federal student loans for qualifying borrowers after 10 years working in the public sector
This program has helped to recruit social workers, teachers, federal and state government workers, doctors serving high need, rural populations, and others.
The Senate held several hearings on the Higher Education Act reauthorization in 2018, but none have specifically focused on graduate students. Senate HELP Chairman Lamar Alexander (R-TN) has previously proposed legislation that would eliminate the current Grad PLUS program and create a new loan program that would impose annual borrowing limits for graduate students. The legislation would continue existing provisions that provide higher annual limits for students in programs with higher need (such as medical schools).
Updated January 2019