Last year, when the college financial aid letters arrived showing loans as part of the "awards," I thought: Gee, it doesn't feel much like assistance to essentially tell new college students and their parents, "Here's how much you can go into debt. Good luck."
This year, the angst wasn't over whether to borrow but how much to bite off with that master promissory note.
Given that my two-college family all too easily slid into the category of owing more for higher-ed debt than for credit cards, I was more than a little interested in the wrinkle in the debt ceiling debate focusing on federal student loans.
That aspect didn't get much media attention in the grand standoff between recklessly intransigent Republicans and a disappointingly capitulating president. And most people wouldn't have imagined that taxpayer subsidies to college students would play a major role in the search for fiscal sanity.
But when you put all the relatively small amounts of assistance together, they add up to real money.
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Once all the posturing cleared, the agreement didn't change much in the loan program for undergraduate students: It just ended a discount for making the first 12 payments on time.
But, starting next year, the government will no longer cover the interest that accrues for graduate and professional students while they're in school.
That's not a welcome message for those looking toward medical, law and business schools. But the two revisions are supposed to result in about $22 billion in savings over 10 years, according to the Congressional Budget Office. Of that, $17 billion will go to pay for Pell grants, which provide up to $5,500 each for the neediest undergrads. The other $5 billion will be a reduction in direct government spending.
It's one segment of Americans contributing to cutting the deficit.
On a New York Times blog about the changes, commenters bemoaned the shafting of lowly struggling students while wealthy Americans and corporate honchos keep their luxury tax write-offs and other federal handouts.
They have a point. The pain of reducing the federal deficit isn't being inflicted fairly, as it should be. And the cuts that still must be hashed out as a result of the debt ceiling agreement almost certainly will devolve into a tug-of-war among special interests.
On the other hand, there's a school of thought that the graduate school subsidies only encouraged students to borrow themselves into drowning debt they can't afford when they enter the job market in a struggling economy.
As of last year, outstanding student loans totaled almost $830 billion, an estimate attributed to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com. But that included both loans through the U.S. Education Department and those through private sources.
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Students with financial need can borrow a certain amount through the Education Department at a low rate (3.4 percent for 2011-12 undergraduates, 6.8 percent for graduate students), and the government pays the interest while they're enrolled full-time. Repayment starts when a student graduates or leaves school.
Other federal loans are available at a slightly higher rate (currently 6.8 percent), but students are responsible for all the interest. Parents can apply for limited loans through the government, too (7.9 percent interest), but repayment starts while a student is still in school.
Private loans, and those taken out before the federal system was simplified in 2010, are a whole other story.
But they're all part of the reality that college today costs too much and is getting more expensive.
My parents put five children through college with a formula that included low state tuition and fees, living at home, scholarships and frugality. But that was in the 1970s and '80s. It often takes additional tools today.
We chose a private out-of-state school and a community college for our kids and are juggling to make that work.
But many families have more limited options. And those could become more constrained because of state funding cuts to public colleges.
Students and families must ask themselves if a college degree is as essential to future prosperity as we've all been led to believe, especially in the current economy — and whether it's worth going deep into debt to achieve. The answer won't be clear for everyone.
