Federal Financial Aid Changes for 2012-13
As the 2012-13 academic year approaches, returning degree and health career candidates may want to be aware of recent changes to the federal financial aid programs. Below, Katie Kelsall, a financial aid advisor for graduate and health careers programs, outlines the latest legislation and what it means for Extension School students.
Last week, Congress passed legislation to extend the 3.4% interest rate on subsidized Stafford Loans for undergraduate students for one year. In order to pay for this temporary extension, Congress agreed to permanently limit eligibility for subsidized loans to 150% of the length of an undergraduate student’s academic program. This change could impact both undergraduate and Health Careers candidates at the Extension School. For example, students in a 4-year bachelor’s degree program will be eligible for subsidized student loans for a maximum of 6 years.
In addition, there are a number of other changes affecting federal financial aid programs beginning this 2012-13 academic year:
- Interest on new subsidized loans will now accrue during the six-month grace period that begins after a borrower graduates or drops below half-time enrollment status. Previously, interest on these loans remained subsidized during grace. This change will impact both undergraduate and Health Careers candidates as well.
- The net origination fee on Federal Stafford Loans, charged by the US Department of Education, will increase from 0.5% to 1%. If you have received a federal loan through us in the past, you may have noticed that the amount disbursed to your student account was slightly less than the amount shown on your financial aid eligibility letter. This difference is due to the origination fee. In 2012-13, the amount you receive on your student account will equal 99% of the total loan amount you accept.
- Likewise, the net origination fee on Parent and Graduate PLUS Loans will increase from 2.5% to 4%.
- Unfortunately, graduate candidates will no longer be eligible for subsidized loan funds. All federal loans for graduate students will be unsubsidized. This means that any federal loan borrowed by a graduate student will begin accruing interest at the time it is disbursed. Loan limits, however, have not changed.
Most of these changes are the result of the Budget Control Act of 2011 and the Consolidated Appropriations Act of 2012. Of course, we realize that they are not ideal; however, they have been made, in part, to maintain other federal aid programs, such as the Federal Pell Grant.
Please keep these changes in mind when you review your financial aid eligibility letters this year. If you are an admitted candidate who submitted a complete financial aid application by the priority deadline, you will hear back regarding your eligibility prior to the opening of registration.