Upcoming Financial Aid Changes
Updated: May 13, 2010
As the famous adage goes, "Good things happen fast, but the best things take time." The same can be said for financial aid reform and most substantial changes in Congress. This page, updated continually by our Student Advocates, holds any delayed reforms or legislation that has already been passed and ratified by the government. In effect, you should look here as a placeholder for any changes that are approved to take effect in the near future.
On July 1, 2010, the subsidized Stafford loan interest rate decreased from 5.6% fixed to 4.5% fixed for the 2010-2011 academic year. This is a planned reduction. As of May 2010, the unsubsidized Stafford loan interest rate will not change and is set to remain at 6.8% fixed.
As a part of the Student Aid and Fiscal Responsibility Act (SAFRA), certain provisions and scheduled program improvements are currently delayed until 2014.
Planned Income Based Repayment Enhancements
Thanks to a $1.5 billion infusion of funds provided by cutting the FFEL program, eligibility requirements are going to be relaxed further and loan forgiveness will be accelerated. Assuming no amendments or further changes to SAFRA, the payments to income ratio for eligibility is being dropped to 10%. This change is being made to attempt to increase the ability of graduated students to manage finances and afford living costs while paying down loan debt. Additionally, instead of the previous 25-year period before loan forgiveness, the program is being accelerated to 20 years.
Pell Grant Restructuring
Of the many changes occurring within the Pell Grant program, the growth structure of this aid product is actually going to be fundamentally changed, starting in 2014. According to SAFRA, Pell Grant maximum award growth is going to be directly linked to the Consumer Price Index (CPI).
If you are wondering what the benefit of this change is, the long and short is the award's payout increases and decreases depending on cost of living and inflation. Essentially, this attempts to maintain the grant's buying power going forward more efficiently and intelligently than a simple linear growth plan.