Some changes in federal financial aid for college students are coming soon.
Pending higher student loan interest rates are in limbo. Unless Congress acts to delay this change, the interest rate for subsidized federal student loans will double to 6.8% in July. Although both parties agree on keeping the lower rates, disagreement on how to pay for this benefit has stalled action on this issue.
In addition, the maximum eligibility period for Pell Grants will be cut from eight to six years starting with the 2012-13 school year.
More new developments in federal financial aid affecting high school graduates heading for college this fall:
- If a student’s family income doesn’t exceed $23,000, their expected family contribution will automatically fall to zero — this has been reduced from the previous maximum income of $32,000.
- To qualify for federal student aid, students applying in higher education for the first time must have either a high school diploma or a recognized equivalent such as a GED, or have been home schooled. This erases a previous option of passing an approved test or completing at least six credit hours or 225 clock hours of post-secondary education.
- Direct subsidized loans will not be eligible for an interest subsidy during the six-month grace period after graduation, meaning interest will begin to accrue as soon as a student graduates or leaves college.
- Graduate and professional students are no longer eligible to receive subsidized loans, but can qualify for up to $20,500 in unsubsidized loans each year.
- The U.S. Department of Education can no longer offer borrowers repayment incentives, except interest rate reductions to borrowers who agree to have payments automatically electronically debited from their bank account.