The Office of Financial Aid would like to share with you a number of changes to student federal loans and grants for the 2012–2013 academic year as a result of the Consolidated Appropriations Act, 2012 and the College Cost Reduction and Access Act of 2007.
Expected Family Contribution
A change has been made to the income amount that is used to determine if a student qualifies for an automatic Expected Family Contribution (EFC) of zero.
- When you complete the Free Application for Federal Student Aid (FAFSA), you receive an EFC number that is used to determine your federal student aid eligibility. For the 2012–2013 school year, you will automatically qualify for an EFC of zero if your family income does not exceed $23,000. This is a reduction from the previous maximum income of $32,000.
Federal Verification Process
Schools are no longer allowed to accept personal tax returns for verification purposes. If a student is selected for the verification process, he or she must now submit an official IRS tax return transcript.
Federal Pell Grant Program
Once you have received a Pell Grant for 12 semesters, or the equivalent, you will no longer be eligible for additional Pell Grants.
- 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%. If you have exceeded the 600% maximum, you will lose eligibility for additional Pell Grants beginning in the 2012–2013 school year.
- For example, if your maximum Pell Grant award amount for the 2010–2011 school year was $5,550, but you only received $2,775, you would have used 50% of your maximum award for that year. If you then receive 75% of your eligibility in the next year, the total received in two years would be 125% out of the total 600% lifetime limit.
Federal Direct Loan Changes
Interest subsidies for subsidized loans have been eliminated.
Direct subsidized loans will not be eligible for an interest subsidy during the six-month grace period.
Graduate students are no longer eligible to receive subsidized loans.
- Effective for loans made for loan periods that begin on or after July 1, 2012, graduate 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 award 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 Federal Direct Loan borrowers. Incentives include upfront interest rebates, reduced interest rates, and reduced origination fees. However, interest rate reductions to borrowers who agree to have payments automatically electronically debited from their bank account are allowed.
You may also visit Student Aid on the Web to learn about these changes.