Changes to the Student Aid Programs
Below is an overview of changes that could impact your financial aid for the upcoming
and in the future.
IRS DATA Retrieval
In order to make sure your application is processed accurately, the U.S. Department
of Education recommends all students and/or Parent(s) (Spouse, if married) to use
the Internal Revenue Service (IRS) Data Retrieval option on the FAFSA to avoid the
possible selection of the verification process.
The FAFSA application is FREE to complete!
Please visit www.fafsa.ed.gov and log-in with your Federal PIN to complete your application.
If you need to apply for a Federal PIN (Personal Identification Number), or if you
have misplaced your Federal PIN, then you must visit the PIN Site.
The PIN is required to complete the FAFSA process.
As a result of recent legislative changes, please be aware of a number of new requirements
for the federal student aid programs. Most changes are effective with the 2012-13
school year (July 1, 2012 through June 30, 2013).
Eligibility of Students Without a High
If you are enrolling in higher education for the first time on or after July 1, 2012,
in order to be eligible for federal student aid, you must have either a high school
diploma or a recognized equivalent (such as a General Educational Development certificate
(GED) or have been home schooled).
- You will no longer have the option of becoming eligible for federal student aid by
passing an approved test or completing at least six credit hours or 225 clock hours
of postsecondary education.
Expected Family Contribution
The lower a student's Expected Family Contribution (EFC), the higher the student's
federal student aid eligibility. A change has been made to the income amount that
is used to determine if a student qualifies for an automatic EFC of zero.
- When you complete the Free Application for Federal Student Aid (FAFSA), you receive an Expected Family Contribution, which is a number used to determine
your federal student aid eligibility. For the 2012-13 school year, you will automatically
qualify for an Expected Family Contribution of zero if your family income does not
exceed $23,000. This is a reduction from the previous maximum income of $32,000.
Federal Pell Grant Program — Duration of Eligibility
Once you have received a Pell Grant for 12 semesters, or the equivalent, you will no longer be eligible for additional
- You are eligible to receive a Pell Grant for up to 12 semesters or the equivalent.
If you have exceeded the 12-semester maximum, you will lose eligibility for additional
Pell Grants beginning in 2012-13 school year. Equivalency is calculated by adding
together the percentage of your Pell eligibility that you received each year to determine
whether the total amount exceeds 600%.
- For example, if your maximum Pell Grant award amount for the 2010-2011 school year
was $5,550, but you only receive $2,775 because you were only enrolled for one semester,
you would have used 50% of your maximum award for that year. If in the following school
year, you were enrolled only three-quarter time, you would have used 75% of your maximum
award for that year. Together, you would have received 125% out of the total 600%
Direct Student Loan Changes
Direct Subsidized loans will not be eligible for an interest subsidy during the six-month grace period.
- Subsidized loans are loans for which the borrower is not responsible for the interest
while the student is enrolled in college on at least a half-time basis, when the loan
is in the six-month grace period after the student is no longer enrolled at least
half time, or if the loan is in a deferment status. This provision eliminates the
interest subsidy provided during the six-month grace period for subsidized loans for
which the first disbursement is made on or after July 1, 2012, and before July 1,
2014. If you receive a subsidized loan during this timeframe, you will be responsible
for the interest that accrues while your loan is in the grace period. You do not have
to make payments during the grace period (unless you choose to) but the interest will
be added (capitalized) to the principal amount of your loan when the grace period
ends. This provision does not eliminate the interest subsidy while the borrower is
in school or during eligible periods of deferment.
All subsidized loans made to undergraduate students will have a fixed interest rate of 6.8%.
- Subsidized loans for which the first disbursement is on or after July 1, 2012, will
have a 6.8% fixed interest rate. Note: In the President's FY2013 budget request, the
Administration has proposed maintaining the interest rate on subsidized loans at the
current rate of 3.4% for the 2012-2013 school year.
Graduate and professional students are no longer eligible to receive subsidized loans.
- Effective for loans made for payment periods that begin on or after July 1, 2012,
graduate and professional students are no longer eligible to receive subsidized loans.
However, if you are a graduate or professional student, you may still qualify for
up to $20,500 in unsubsidized loans each year.
The U.S. Department of Education can no longer offer borrowers repayment incentives.
Effective for loans first disbursed on or after July 1, 2012, the Department of Education
is prohibited from offering any repayment incentives to Direct Loan borrowers, except
interest rate reductions to borrowers who agree to have payments automatically electronically
debited from their bank account).
If you have any questions about how these changes could impact you, please contact
the financial aid administrator at your school or call 1-800-4-FED-AID.