Subsidized loans do not accrue interest while you're enrolled in school full time. Removal of this option means that any student loans taken out while in graduate school will accrue interest. This is not so bad for business school students since MBA programs are only two years long, but for law and particularly medical school students the impact will be much stronger. These students have longer programs (three and four years plus residency respectively) which means more years of tuition, fees, living expenses and no income that need to be paid for and more years in which interest can accrue.
I'd considered a subsidized Stafford loan as a potential source of an emergency fund for next year (I have cash for one this year) but that option is off the table now. Most likely I'll use a loan from my SO if we can come to a mutually beneficial agreement or my roth IRA as my emergency fund instead. This also means that if I do have to take out student loans next year I'll be limited to loans that accrue interest, making the process more expensive.
I probably wouldn't have picked subsidized student loans as an area I'd cut were I in congress since the program cost is relatively low and I imagine that they will have more students opting for private loans instead while interests rates are low meaning they may have less revenue coming in long-term. I don't know if this will be substantial enough trend to result in the end of subsidized loans causing a greater reduction in revenue than the original subsidy did. Either way, having a compromise in hand and not defaulting is significantly more important.
Are you affected by the end of subsidized federal loans for grad students? Was this the right decision in the debt ceiling compromise? Will students opt for private loans instead at a high enough rate for the decision to cost money instead of saving?