As a result of recent legislative changes, you should be aware of a number of new requirements for the federal student aid programs that became effective July 1, 2012.
Here's an overview of the changes that will impact your financial aid for the 2012–13 school year (July 1, 2012, through June 30, 2013) and in the future.
Eligibility of Students Without a High School Diploma
If you enroll 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 a homeschool education).
- You 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. For more information, see the basic eligibility requirements for federal student aid.
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 whether a student qualifies for an automatic EFC of zero.
- When you complete the Free Application for Federal Student Aid (FAFSASM), you receive an EFC, which is a number used to determine your federal student aid eligibility. For the 2012–13 school year, you automatically qualify for an EFC of zero if your family income does not exceed $23,000.
Federal Pell Grant Program—Duration of Eligibility
Once you have received a Pell Grant for 12 semesters, or the equivalent, you are no longer eligible for additional Pell Grants.
- 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 lose eligibility for additional Pell Grants beginning in the 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 2010–11 school year was $5,550, but you receive only $2,775 because you were enrolled for only 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% lifetime limit.
- Learn more about the Pell Grant limit.
Direct Student Loan Changes
Direct Subsidized Loans are not 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 are 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 capitalized (added 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.
Subsidized loans made to undergraduate students.
- Subsidized loans for which the first disbursement is made on or after July 1, 2012, and before July 1, 2013, have a 3.4% fixed interest rate.
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 U.S. 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 (1-800-433-3243).