Financial Aid Changes for 2012-2013 | 06.29.12

Posted in Financial Aid, Graduate Loans, News, Repayment, Stafford Loan, Student Loans By Student Loan Network Staff

With all this talk of the impending Stafford Loan interest rate hike, many other regulation changes have been overlooked. Starting July 1, there are a handful of other updates to federal loan programs that borrowers should be aware of. These changes will not affect loans that were originated before July 1, only loans originated for 2012–2013.

Here’s a breakdown of what you can expect to see for this upcoming academic year:

Subsidized Stafford Loan Changes

No more subsidized loans for grad. students — Just like undergraduates, graduate students were previously able to receive both subsidized and unsubsidized loans. Starting this year, only unsubsidized loans will be available for grad. students at a 6.8% interest rate.

Elimination of interest subsidy for grace periods — Subsidized Stafford Loans were less expensive than their unsubsidized counterparts because 1) the interest rate was lower and 2) interest was subsidized while enrolled in school and during the 6 month grace period after leaving school. Starting this year, there will be no interest subsidy during grace periods, however, the subsidy will still exist while enrolled in school at least half-time.

UPDATED: Extension of reduced interest rate — As I’m sure most students have heard, a bill was set to expire this year, doubling the rates for Subsidized Stafford Loans to 6.8%. Luckily, Congress just passed a bill to keep the rate at 3.4% for the 2012-2013 year. Learn more about Stafford interest rates, past and present.

Pell Grant Changes

Decreased eligibility — Last December, President Obama signed the Consolidated Appropriations Act 2012, which brought with it a change to the Pell Grant Program for the 2012–2013 year. Starting in Fall 2012, the Pell Grant is limited to 12 full-time semesters per student. The way this is calculated is by percent, where 600% is the maximum a student is eligible for. For example, if you receive a maximum Pell Grant for both semesters, your percentage used would be 100%.

Other Changes

Lowered income limit for automatic zero — When families file the FAFSA, they receive their Expected Family Contribution (EFC) – a number detailing how much of the school costs a family should be able to provide out of pocket. In previous years, anyone with an income of $32,000 or less received an automatic zero for the EFC. This allowed lower income families to be eligible for more need-based aid. This year, the income limit has been reduced to $23,000, which will cut funding for many students.

Termination of repayment incentives — The Department of Education can no longer offer repayment incentives to Direct Loan borrowers, except an interest rate reduction for auto payment. Again, this is only for loans originated after July 1, 2012 — Repayment incentives may still be available for older loans.

If you have any questions about these changes, you should contact the Department of Education: 1-800-433-3243.

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25 Responses to “Financial Aid Changes for 2012-2013”

  1. Jenn says on March 3, 2013 at 1:19 pm:

    You know another problem here is that the government needs to put a cap on how much colleges can charge these days as well. For example if a college can handle your finacial aide and get the money you borrow, they should not be allowed to charge more for the schooling that you get in MAXED finacial aide. For example I go to Kaplan university and they charged all in all ( I am a senior getting my bach in psychology) over seventy thousand dollars. They took twenty thousand in pell grant money, and the rest was loans throught the government. They MAXED me out by a total 4 grand…now how is this possible??? well, when I started and reviwed this with finacial aid they told me my total four year price with my degree program was 58 thousand…hmmmm so I would have been covered by federal loans and pell grants making it about thirty in loas I would actually have to pay back….AFTER they locked me in the school they raised it EVERY YEAR….to the amount I stated about thirty thousand over what they said WOULD NOT CHANGE. THIS should be illegal for schools and colleges to do in the first place. If your government wants to save money by cutting funding they need to protect thier citizens by NOT allowing schools to do what happend to me. It is a damn damn shame …and I never pulled a stipend but one time that they assured me would not affect my finacial aide, only if I took out more which I did not. PISSED off I am one term away from graduating can not get a personal loan and dont know what I am going to do. I have to pick up two jobs now to pay the rest off all while having a newborn and a homeschooled daughter.

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  2. Elspeth says on March 3, 2013 at 10:56 am:

    All the comments I’m hearing break my heart and I’m right in there with you. I’ve been unemployed for two years and still trying to complete my graduate degree. I was supporting myself with school financial aid and unemployment benefits. Last year I maxed out on my UE benefits and now they tell me they cut one of my loans? What am I supposed to do? I had a little savings so at the start of the school year I was making out alright but now: savings gone, no job and I’m almost without a dime! I went back to school because I thought it would lead to a better job and hopefully a better life for me and my husband. I don’t know what I’m supposed to do now. No one wants to hire someone whose over educated. But I find that totally absurd. I’m sick of this country and giving all our money away to foreigners who would ever TRY to become citizens. In the EU they have immigration quotas and they have very strict immigration laws. Not this country. The whole thing sucks. We always give lip service to how important education is but it means bull when they treat people like this. It’s really pathetic.

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  3. CS says on January 19, 2013 at 12:52 pm:

    I wanted to return to school in my 40′s but my X partner assaulted me in my University class room,so I transferred out to another state,this made me max out my Federal Loans plus I did not graduate and thats been 2007. I need further training and I am broke,have NO co-signer, homeless with two children to care for I need an alternative way to pay I have been racking my brain for simply years now- Please someone HELP!!!

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  4. Tee says on August 30, 2012 at 4:28 pm:

    Yeah, I got hit by the changes too…my student loan amount was slashed in half, so now I’m back to working 7 days a week 2 pay for my tuition….when will I have time to study? No clue! I am absolutely disgusted by politicians and the war on the middle class, I’m frightened because the last time I worked 7 days a week and went to school full time I became sick…I don’t want to end up in the hospital again but what choice do I have? I want to be done with this nonsense already! I’m not even going to bother voting this year…These politicians are not worth the missed wages!

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    • katrina howard says on November 1, 2012 at 8:15 am:

      You can thank our House Republicans for this

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      • Elizabeth Kable says on July 24, 2013 at 10:19 pm:

        Actually, before you make comments such as these you need to research better on who really started the loan mess. It was Obama who stripped the Pell Grant monies to begin with.

        “The Pell Grant program, which provides millions of dollars in aid…””The cuts were part of a larger $3.7 trillion federal budget Obama announced Monday at a middle school in Baltimore.” MNDaily

        “Sorry, college students. President Obama has cut your access to Pell Grants by 33%; he just forgot to mention it before Election Day.” and that from GP, a highly liberal outlet

        Two sources from two views. But, hey… he does no wrong.

        Perhaps if the Obama’s were not spending so much of taxpayers money on frivolous vacations during economic struggles and playing blame games; something other than nothing could get done.

  5. Jane Sharpe says on August 15, 2012 at 9:02 pm:

    Yes, this is a wonderful country we live in! We spend all our hardworking tax dollars on giving foreignors a free ride on education, jobs, places to live, etc. but when it comes to the average middle class families and their children, they get nothing. You have to be handicapped, disabled, on welfare or a minority to receive any decent amount of help for your children if you are a middle class family and even being a single parent doesn’t matter either! I am a single parent and my son received a big $200 TAP award and there are no scholarships available for him. I was set to retire within the next few years but not now, had to get a parent plus loan for $12,000 + and my son was approved for a whole big $5,000 and this is only the cost of one year! Where is all the help promised for those kids who want to go to college and don’t have the funding, oh…what they meant to say is only those who are disabled/handicapped/welfare clients or minorities! Well as far as I’m concerned the middle class children now ARE THE MINORITY!
    I am soooooo disappointed in this country anymore!

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    • Rose Brown says on August 20, 2012 at 2:22 pm:

      It is not just the middle class that is suffering. I have been maxed out on my student loans and my husband and I get a little over 33,000.00 a year in disability income, so being disabled does not necessarily automatically qualify you for a loan. I cannot finish my degree because I cannot get anymore help from the government. They have not only changed the income guidelines, they have changed the maximum amount a student can borrow towards their degree. The cost of tuition keeps going up, yet the help you can get decreases. I just want to be able to get my degree so that I no longer have to depend on the government for my income. That was my main reason for returning to school and now they are going to have to continue to support me because I cannot finish my education. What is wrong with this picture?

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    • Linda says on August 28, 2012 at 12:05 pm:

      I totally agree with you! I am completely disappointed! I am in the same situation as many others. My daughter only received the very small amount of $5,000 as well and I was denied the Parent Plus loan. I have no idea how I am going to be able to pay for her college. Maybe I should quit my job get on welfare for the next four year and receive some kind of help! The only help this country gives is to foreigners!

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  6. Jeannie says on August 10, 2012 at 3:23 am:

    I have been so excited to send my oldest son off to college. He was a good student in high school with good grades but missed the cut for scholarship. If his left eye was different color than right their was a scholarship and many more criteria specific but not one for average person. We made too much last year for grants and our EFC was $14200. However IV been out of work for months and income cut in half. They offered him $1700 in unsub loan and his tuition $6000. I applied for a parent loan and was declined so they gave him $ 1750 in unsub. With the one scholarship he got we still owe some tuition and will have to buy books. Do to my work status and some bad health I don’t know how I can come up with $1000 extra money. We have two other children in school. I’m not asking for refund money just pay tuition and books. Some local colleges are choosing not to give any loans to first time students til they have 12 hrs of successful hours. In our town 4 factories have closed in past 10 years now my husbands employer of 22 years is closed down to half of what it was so what are kids gonna do. This country is back paddling.

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  7. Gary Schneider says on August 8, 2012 at 9:44 am:

    My daughter started college last year and we got a parent plus loan. This year, when we went to apply our plus loan was declined due to a charge off in my credit history in 2008. That charge off was there last year and I could get the loan, so my situation hasn’t changed, but now I am no longer “credit worthy”. Go figure. Now we are scrambling trying to find a loan (at a much higher interest rate) and my daughter is in a panic since if we can’t get a loan, in 3 months will have to start paying on her existing loans and no career in site since she couldn’t complete college.

    Reply To This Comment
    • Student Loan Guru says on August 8, 2012 at 11:49 am:

      @ Gary – Since you were denied based on credit, your daughter should be eligible for an additional amount of Stafford Loans. It is strange that you were approved one year but not the next, but it could be that the previous year’s PLUS loan tipped the scales, since overall debt is a credit factor.

      If the additional Stafford loans don’t cover all of your daughter’s expenses, you can reapply for the PLUS loan with a cosigner, or consider a private student loan (with a good cosigner, private loans may have even lower rates than the PLUS).

      Hope this helps!

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  8. Stephanie Ritchie says on July 27, 2012 at 5:01 pm:

    I am so terribly upset over the changes- I am a single mother who finally returned to school to complete my bachelors degree- I had plans on staying throughout and obtaining my masters but given the changes I am unable to. I waited to return to school until my children were older- only because I had to work FT to support them and didnt have time for school while tending to them at the same time. now that they are older and more “independent” I have the time to devote to school work- but now I am facing limited funding which I still need as well as their education future being in jeopardy since I do not have the resources to pay their tuition- scholarships are an option but not everyone is eligible and sometimes they are few and far between – not to mention they ultimately count as income so no matter which way one turns- secondary education is not an option for some families due to the changes.

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  9. kathy says on July 27, 2012 at 11:05 am:

    Ha! makes me laugh – we say education is important in America but impossible for middle class family to send kids to college without jeopardizing our future – you either have t be poor or very rich to afford college! Also, I am a teacher and I do not feel that education is valued from the way we are treated.

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  10. Rhonda says on July 27, 2012 at 6:19 am:

    I am floored at what is being taken away from our children and their future. I totally agree with others comments on getting back into investing more in education and less in war. Where has that gotten us!!! We are already falling behind in technology and education this is just going to make it worst. Is there anyone out there who has an address or information on who to email,write or call to get some real changes in place for our education and loans.

    Reply To This Comment
  11. NOELYS says on July 26, 2012 at 9:14 am:


    Reply To This Comment
    • Rose Brown says on August 20, 2012 at 2:30 pm:

      This is what is wrong with this country. If you can’t even speak the language of this country, you have no business being here or even applying for student loans that should be meant for people who are born and raised true-blooded Americans. I don’t have a problem with immigration but if you are going to immigrate to this country, at least give us the respect of learning and USING the language of this country!

      Reply To This Comment
      • Your Mama Jamma says on March 21, 2013 at 8:46 pm:

        YOU are what’s wrong with this country. Just because you are too ignorant to learn a second language–a language that not only 24% of this country speaks, but also 20 countries worldwide speak–doesn’t mean that others should dumb themselves down in order to cater to your insecurities. If you actually spoke Spanish you would know that this person is from Puerto Rico, a US territory, where they learn both English and Spanish throughout elementary and secondary school and that this person is AS eligible to receive student loans as any other “true-blooded American.”
        Tell you what Rose Brown, I’m going to start a separate educational fund just for you because you really do need the extra education to unlearn some of your xenophobia and bigotry.
        What do you say everyone? Will you donate $5 to the Rose Brown Educational Fund? She needs it as much as this so called “immigrant” she responded to.

  12. Glen says on July 25, 2012 at 11:13 am:

    I am paying the 6.8% for my graduate loans. Is there a way of getting them refinanced down to the 3.4%

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  13. Roxanne says on July 25, 2012 at 12:35 am:

    I totally agree. It’s very discouraging. In this day in age people have to be more creative to make money for a living. But, even the creatives need degrees to keep up with technology. All in all, it keeps becoming less and less inspiring to obtain a degree, especially with tens of thousands of dollars waiting to be hung over the head.In return, making it even more difficult to contribute to society in a positive way.

    Reply To This Comment
  14. Tashia says on July 24, 2012 at 5:06 pm:

    The government has been sending me notices about the changes in financial aid and it makes me sick every time I hear about it. I am in my last year of school as an adult student and I also have my daughter in college and it’s like how the heck am I supposed to pay for my last year when I am so close. I agree with Cody and Oddi, in simple words, this all sucks.

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  15. Oddi says on July 24, 2012 at 4:05 pm:

    This country needs to invest more in education and less in war. We need to go back to the era when USA was a leader in technology and innovation. We need more resource to go back to a school with less debt at the end of a career.

    Reply To This Comment
  16. Cody says on July 24, 2012 at 1:47 pm:

    All of the cuts listed above are troubling. How are we to become a nation vested in science and math if we can’t afford to go to school?

    Reply To This Comment
  17. Susie Watts, Private College Counselor, Denver, Colorado says on June 30, 2012 at 11:27 am:

    Great information. Families need to have the most updated facts on financial aid in order to make the best college decisions. I will email this to the students I am working with in hopes that it will clear up any confusion having to do with the financial aid process.

    Reply To This Comment

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