Detailed Update on Federal Financial Aid Changes and end of grad school loan subsidy

Paying for College
1

<p>[Congress</a> Raises Debt Ceiling, with Shifts and Cuts in Student Aid Funding - Fastweb](<a href=“http://www.fastweb.com/financial-aid/articles/3216-congress-raises-debt-ceiling-with-shifts-and-cuts-in-student-aid-funding?utm_source=nlet&utm_content=fw_c1_20110809]Congress”>http://www.fastweb.com/financial-aid/articles/3216-congress-raises-debt-ceiling-with-shifts-and-cuts-in-student-aid-funding?utm_source=nlet&utm_content=fw_c1_20110809)</p>

<p>The above is a thorough new update about changes to Federal financial aid programs, from fastweb.com. The most notable change is the elimination of the Federal government paying the interest for some graduate and professional school loans while the student is still in school. That takes effect the summer of 2012.</p>

<p>There also are changes to on-time payment incentives for Federal loans. The number of semesters are limited for use of Pell grants.</p>

<p>Excerpts:</p>

<p>"The debt deal eliminates subsidized interest on Stafford loans to graduate and professional students, effective for new loans made on or after July 1, 2012. It also eliminates all repayment incentives in the Direct Loan program for new loans made on or after July 1, 2012, except for discounts for borrowers who repay their loans via auto-debit. These changes do not affect existing loans.</p>

<p>Note that undergraduate subsidized Stafford loans owed by a graduate student do not lose their subsidized interest benefit. In particular, the federal government will still pay the interest on an undergraduate subsidized Stafford loan while the student is enrolled in graduate or professional school. The legislation affects only the availability of subsidized Stafford loans to pay for graduate and professional school starting on July 1, 2012, replacing them with the same amount of unsubsidized Stafford loans."</p>

2

<p>The most likely scenario involves changing the eligibility requirements for the Pell Grant program, such as reducing the eligibility from 18 semesters to 12 and requiring at least half-time enrollment.</p>

<hr>

<p>As usual, our legislators are clueless. Since Pell usage has only been tracked since the 08-09 award year, this very little immediate impact on Pell funding. </p>

<p>When they say “semesters” they don’t actually mean semesters. What they are actually referring to is % of scheduled award, with 50% being equivalent to one semester. So 18 semesters is equivalent to 900% or 9 full Pell scheduled awards. 12 semesters is equivalent to 600% or 6 full Pell awards.</p>

<p>The most a student could have received in 08-09 was 100%. The most a student could have received in 09-10 and 10-11 was 400% due to 2nd Pell … but only a VERY few would have received the entire 400%. A number of students would have received 300% during that time period, but the majority of students would have received 200%. Only 100% is available in 11-12 since 2nd Pell is gone. I worked at a large state U with a huge Pell population, so I believe I can confidently state that only a few students will pass the 600% cap at the end of 11-12, affecting 12-13 … NONE will lose eligibility in 11-12, as that is not mathematically possible. There will be a surge in numbers hitting 600% in 13-14, but the big uptick will not be until 14-15.</p>

<p>And requiring half time enrollment is stupid … way to penalize those who work to pay for school.</p>

3

<p>Have to agree with you Kelsmom on the half-time thing. Goodness the kids that NEED Pell need to work, too and most of them work first and attend school second.</p>

4

<p>Kelsmom, to me that about as clear as mud for me regarding Pell grants. Not your fault, but it just seems so complicated!</p>