How Your Federal Student Aid Will Change in 2013
The Obama Administration began with an ambitious agenda to expand the federal student aid program. However, with the drama over the debt ceiling and other issues, the administration has had to make plenty of compromises to that agenda—resulting in less aid eligibility to students. However, the administration did manage to preserve and incrementally expand some programs in the most recent “fiscal cliff” negotiation.
Here’s an overview of some of the more significant changes that will affect students during the 2012-2013 school year.
Students with no secondary-level diploma can no longer qualify for federal aid
In the past, students who were not home schooled and did not hold a high school diploma or GED could qualify for federal student aid if they achieved a passing score on the Ability to Benefit (ATB) test. Starting July 1, 2012, that is no longer the case. Students without a high school diploma (or equivalent GED or home schooling credentials) can no longer qualify for federal aid, but they can still go to participating colleges that accept ATB scores.
See Also: Online Degree Programs
Your Expected Family Contribution changes
The Expected Family Contribution (EFC) is the amount the federal government and your school expect your family to be able to contribute toward your education in addition to federal loans, grants, and other student aid. The lower your EFC, the less your family will have to pay out of pocket. Starting in the 2012-2013 school year, you automatically qualify for a $0 EFC if your family makes less than $23,000 per year.
See Also: Online Colleges and Universities
A reduction in Pell Grant eligibility
Students can now only qualify for a Pell grant for twelve semesters. The way your eligibility is calculated—and what counts as “twelve semesters”—isn’t as straightforward as it seems, however. Check out this website* to find out more about your Pell Grant limit.
No interest subsidies during the grace period
Subsidized loans are loans in which your interest does not accumulate while you’re in school. In the past, the interest did not kick in until the end of a six-month grace period after graduation. Starting in July 1, 2012, loans originated during or after that time do accumulate interest during the grace period. You don’t have to start paying back the loan until after the grace period is over, but your loan will be growing during that time.
Graduate students can no longer receive subsidized loans
In the past, graduate students were also eligible for subsidized loans. But as of July 2012, if you’re in graduate school, law school, medical school, or another professional program, you are no longer eligible to receive federal subsidized loans at all. All loans made to postgraduate students will start to accumulate interest while the student is studying.
No more repayment incentives
Starting this school year, the US Department of Education is no longer offering repayment incentives to direct loan borrowers. There is one exception, however—interest rate reductions are still available to borrowers who sign up for automatic deductions of loan payments from their bank accounts.
Changes to federal student aid in 2012 have been a mixed bag. On the one hand, the Obama Administration managed to negotiate the preservation and even expansion of some benefits and tax incentives for students. On the other, federal aid has been significantly reduced in areas that will definitely cost students money—including the elimination of subsidized grace periods for undergraduates, and the removal of subsidized loans entirely for graduate students. Even so, hopefully 2013 will see more expansions to federal aid that will help make traditional and accredited online colleges more accessible to all.
Sources
*Student Aid.gov: Recent Changes to Federal Aid
More About Financial Aid
- Can You Hurt Your Chances for Federal Financial Aid By Saving Too Much for College?
- In a Same-Sex Marriage? How Your FAFSA Will Change in 2014
- How Your Federal Student Aid Will Change in 2013
- Do Younger Children Get a Better Deal on Student Aid?
- Senior Citizens and the FAFSA: Getting Federal Aid When You're Over 60
- Can Your Credit Score Affect Your Federal Aid?
- Tuition Aid for International Students: The Funding Landscape
- Major Changes to Your Federal Student Aid in 2012-2013: What's Ahead
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I think that it is CRIMINAL that students are NOT given an amortization schedule with total costs of keeping the student loans--they do not have to be actual time period but still have schedules if they take 5, 10, 15 years to pay off the loans.... Mortgage loans are costing less than these STUDENT RIPOFF LOANS which in my opinion are worse than credit card companies' soliciting students. Students expect the colleges to looking after them and Financial Aid offices are only looking after the behind the scenes back door kickbacks from making so many loans!!!