Changes in Federal Financial Aid
Federal Pell Grant:
Beginning in Fall 2012, students are now limited to 12 semesters or 600% of Pell Grant eligibility during their lifetime. All students are affected regardless of when they received their first Pell Grant award. Students that received a Pell Grant during 2011-2012 and have used 600% of their Pell Grant eligibility will no longer be eligible for Pell Grant starting Fall 2012. Students who have not used 600% of their Pell Grant eligibility during the 2011-2012 academic year, will still have Pell Grant eligibility during the 2012-2013 academic year.
If you attended college for 4 years or longer as a fulltime student and received the Pell Grant each year, you are likely to have exhausted your lifetime limit of 12 semesters or 600% of Pell Grant eligibility during 2011-20112 school year.
If you attended college for 3 years or less you will likely still have Pell Grant eligibility during the school year 2012-2013.
The percentages are calculated based on the annual award at fulltime enrollment status. For students with an annual award for the 2011-2012 academic year taking 12 or more credits in each semester (Fall and Spring for example), the percentage used for 2011-2012 academic year is 100%. If you only take 9 credits for two semesters the percentage used for the academic year would be 75%.
You can view your updated percentage of Pell Grant used on or after July 12th 2012 by logging into NSLDS.ed.gov. Your Lifetime Eligibility Used )LEU) percentage will display in the Grants section.
- EFC Changes: Students with an EFC (Expected Family Contribution) of 4996 or higher will not be eligible for a Pell Grant for the 2012-13 academic year.
- IRS Tax Transcript: If you are selected for verification of your FAFSA, we can no longer accept signed copies of federal tax returns. You must use the IRS Data Retrieval Tool when completing the FAFSA to populate the financial information on your FAFSA, or request an IRS Tax Transcript and submit it to our office with any other verification documents that may be needed.
Direct Loan Changes:
Interest Rate Change
The interest rate on Subsidized Direct Loans will double from 3.4% to 6.8%.
- The interest rate on subsidized loans made to undergraduate students will increase to 6.8% if the first disbursement is on or after July 1, 2012. The rate will remain at 6.8% on unsubsidized loans and on loans for graduate students. Note: In the President’s FY2013 budget request, the Administration has proposed maintaining the interest rate on subsidized loans for undergraduate students at the current rate of 3.4% for the 12-13 school year; however, until a decision is made the interest rate will increase.
Graduate and Professional Students Only- Subsidized loan eliminated as of July, 1 2012
Beginning July 1,2012, all graduate and professional students will lose the interest subsidy on the Subsidized Stafford loan, and will be charged interest immediately. The graduate Stafford loan program will become entirely unsubsidized, which means the loan will accrue interest while a student is in school. These changes will not affect the annual and aggregate borrowing limits. The maximum amount a student can borrow will remain at $20,500 per academic year. Borrower must be enrolled at least part time.
Loss of “origination fee rebate” affecting Stafford, Grad PLUS and Parent Plus
Currently, there is a 1% origination fee on a Stafford loan and a 4% fee on PLUS loans, but a portion of the fee, .5% for a Stafford and 1.5% for a PLUS, is rebated at the time of disbursement. Beginning July 1, 2012, the full fee will be charged.
Loss of interest rate reduction
The last change is the loss of the .25% interest rate reduction if you do not pay your loans electronically while in repayment.
- After you leave school: The interest subsidy offered during the six-month grace period on subsidized loans is eliminated for new loans made between July 1, 2012 and July 1, 2014. Loan repayment still begins six months after you are no longer enrolled at least half-time, but interest that accrues during those six months will no longer be subsidized by the federal government. The student will be responsible for the interest that accrues during the grace period.
Federal loans still offer borrowers much more in terms of the following:
o Deferments and forbearance periods
o Multiple options for repayment
o Tax Deductions for loan interest
o Loan discharge due to death, disabilities, bankruptcy
o Loan forgiveness for some borrowers