Congress curtails Pell Grants and federal loan grace period

The budget finalized by Congress on Saturday curtails some federal student financial aid programs.

The two most important changes: A reduction in the number of years students can receive Pell Grant money and the temporary elimination of a six-month grace period on interest payments on federal student loans.

Pell Grant maximum eligibility period cut from eight to six years

College students taking longer than six years to obtain their undergraduate degree would have their Pell grants cut off next school year under a $1 trillion budget bill passed Friday in the House.

Millions of students each year receive Pell grants, which are offered to low-income students and don’t have to be paid back.

The bill keeps the maximum grant award at $5,550, but seeks to save $11 billion over the next decade in Pell dollars, in part, by reducing the maximum number of years the grant can be received from nine to six.

It is estimated that this change would affect about 100,000 individuals, typically part-time or transfer students.

Federal loan grace period

… Congress suspended the six-month grace period on loan interest for graduates with subsidized Stafford loans.

Stafford loan borrowers will still get a six-month reprieve upon graduation from having to pay back their loans, but the principal on the loans will accumulate interest during that period for loans issued between July 1, 2012, and July 1, 2014.

Also will be harder to qualify for automatic zero Expected Financial Contribution (EFC)

It appears that a lower income will be needed to qualify for the automatic zero EFC loophole

The bill also reduces the income level under which a student will automatically be eligible to receive the maximum Pell grants from $30,000 to $23,000.