Impacts to First-Time Borrowers on or after July 1, 2013
On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Public Law 112-141) was enacted which added a new provision to the Direct Loan statutory requirements (see HEA section 455(q)) that limits a first-time borrower's eligibility for Direct Subsidized Loans to a period not to exceed 150 percent of the length of the borrower's educational program.
Federal Loan Changes for 2013-2014
For loans first disbursed after July 1, 2013:
- the interest rate for Subsidized Stafford loans for undergraduate students will increase from 3.4% to 6.8%.
- for both Unsubsidized and Subsidized Stafford loans the origination fee will be 1.051%.
- for both Parent and Graduate PLUS loan the origination fee will be 4.204%
How will the Sequester impact your
What is sequestration?
Sequestration is an across-the-board spending cut mechanism utilized by the federal government that will impact most defense and non-defense discretionary programs. It is designed specifically as a deficit reduction measure and is scheduled to occur over 10 years. Sequestration is the result of the Super Committee's failure to reach an agreement on a deficit reduction deal in 2011.
What does sequestration mean to your financial aid?
- You will see increases to your student loan origination fees. Increased origination fees means decreased disbursements of your loans. The Department of Education has released information indicating the Stafford Direct Loan student origination fee will increase from 1 percent to 1.051 percent. With such an increase, for example, the fee on a loan for $5,500 would increase from $55 to $57.80, an increase of $2.80. The Parent and Graduate PLUS loan origination fees will also increase from 4 percent to 4.204 percent. With such an increase, for example, the fee on a $10,000 Direct PLUS loan would increase from $400 to $420.40, an increase of $20.40.
- There will less campus-based funding available for the 2013-2014 award year. Funds provided by the federal government for the Supplemental Educational Opportunity Grant (SEOG) and the Federal Work Study (FWS) programs will be decreased. The Department of Education has not released the official decreased awards yet, but it could mean less FWS jobs in 2013-2014 and less SEOG funding to award students.
EACH Grants first disbursed after March 1, 2013 will be reduced by 7.1 percent. A student who was eligible to receive the full TEACH Grant Scheduled Award amount of $4,000 would have the award reduced by $284.00 ($4,000 x 7.1%), resulting in an award amount of $3,716.00. Schools were originally notified that the reduction would be 12.6 percent. (updated April 29, 2013)
Any Iraq-Afghanistan Service Grant award where the first disbursement is made after March 1, 2013 (including both 2012-2013 and 2013-2014 awards) must be reduced by 10.0 percent from the award amount for which the student would otherwise have been eligible to receive. Hofstra does not currently have any student enrolled for the 2012-2013 award year that is eligible for this grant. The sequester requires reductions of 10 percent from the award amount for which the student would otherwise have been eligible, not from the Scheduled Award amount of $5,550. For a student whose award would have been at the 2012-2013 Scheduled Award amount of $5,550, the institution must reduce the award by $555.00 ($5,550 x 10%), resulting in an award of $4,995.00. For the 2013-2014 award year, for a student whose award would have been at the 2013-2014 Scheduled Award amount of $564.5, the award must be reduced by $2,133.81 ($5,645 x 10%), resulting in an award of $5,080.50. Schools were originally notified that the reduction would be 37.8 percent. (updated April 29, 2013)
What can you do about it?
Congress does have the power, at any time, to stop sequestration. So contact your congressperson to advocate for educational funding and to end sequestration. To find your congressperson in the House of Representatives visit here.
Financial Aid 101
- Financial aid programs
- How and when to apply
- Criteria for eligibility
- Helpful resources
On Friday, June 29, 2012, Congress passed legislation to extend the 3.4%interest rate on subsidized Stafford student loans for Undergraduate Students for one year. The bill temporarily delays the rate from doubling to 6.8% as of July 1. Experts estimate that this change will reduce costs for these borrowers by as much as $1,000 over the life of repayment or $6 to $9 per monthly payment.
In order to pay for part of the $6 billion cost of temporarily extending the 3.4% rate, Congress agreed to permanently limit eligibility for subsidized loans to 150% of the length of the student’s academic program. This means students in a four-year program will be eligible for subsidized student loans for the equivalent of six years. The student who reaches this limitation could continue to receive unsubsidized Stafford loans if he or she is otherwise eligible.
The legislation mandates that the Department of Education issue regulations on how to determine the aggregate period of eligibility for less than full-time students, students enrolled in preparatory coursework necessary for enrollment in a program leading towards a degree, and students enrolled in a teacher certification program who are not also regular students at the institution.
There has been a change in the law that affects Federal Pell Grant eligibility for the 2012-2013 financial aid year and beyond. This change limits the total number of years a student may receive a Pell Grant to the equivalent of six years* of full-time enrollment or 12 semesters.
*For information on how the “equivalent of six years” is calculated, click on the following link:www.studentaid.ed.gov/pell-limit
Hofstra University has made changes to its Satisfactory Academic Progress (SAP) policy for students who are receiving federal financial aid to reflect the University's academic standing policies that can be found online in the Hofstra University Undergraduate Bulletin and/or Graduate Studies Bulletin.
Federal student aid includes the following: Federal Pell Grant, Federal Supplemental Education Opportunity Grant (SEOG), Federal Teacher Education Assistance for College and Higher Education Grant (TEACH), Federal Perkins Loan, Federal Direct Stafford Loan for Students, Federal Direct PLUS Loan for Parents (PLUS), and Federal Direct Graduate PLUS Loan for Graduate Students (Grad PLUS).
er federal regulations, the new SAP requirements will be implemented effective with the annual review in June 2012.
For more information regarding the new SAP requirements, click here.