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- As part of an effort to reduce the federal deficit by $4 trillion by 2020, the deficit-reduction package being debated in Washington includes a proposal to end the in-school subsidy for graduate-professional students.
- The subsidy uses federal funding to cover the interest on certain federal student loans while a borrower is enrolled full-time in college. The Congressional Budget Office projected savings are outlined below:
|Proposals to End Stafford Loan In-School Interest Subsidy (in billions)|
|2003 CBO Budget Options
|2005 CBO Budget Options
|2007 CBO Budget Options
|2009 CBO Budget Options
|All proposals end the in-school interest subsidy for graduate-professional students only.|
- In June 2010, all higher education student-loan debt (all levels) totaled approximately $830 billion, exceeding credit card debt for the first time. Ending the subsidy will cause this situation to worsen. The projected savings transfer as a cost to student borrowers.
- Current interest rates for Federal Graduate-Professional Stafford Loans disbursed on or after July 1, 2006 is 6.8% fixed; for Grad PLUS Loans Direct Loans is 7.9% fixed
- The subsidy is important because it reduces the barriers faced by students who are talented, disciplined and intellectually capable of fulfilling their dreams of becoming a veterinarian, a dentist, or a physician.
- Losing the subsidy will increase the cost of professional education and drive graduates further into debt. In 2010 the average graduating education debt for veterinary school graduates was $133,783; allopathic medical school graduates averaged $160,000; and dental school graduates averaged $177,144.
- In 2010, veterinary school tuition costs ranged from approximately $10,000 to $60,000.
- In 2010, an AVMA survey found that the mean full-time starting salary for new veterinarians entering private practice was $67,548.
- Other possible consequences of increased costs in veterinary education may lead to:
- Sectors such as livestock medicine and public health, which are already under-served due to lower salaries and geographic issues, will become more so.
- Veterinarians burdened by educational loans will be reluctant to go further into debt to buy their own practices.
- Only students from wealthy families will be able to afford professional schools of veterinary medicine, dentistry, and osteopathic/allopathic medicine.
AVMA Contact: Gina Luke, Assistant Director Governmental Relations Division, 202-289-3204.