New Financial Aid Measures For Students
Students who get federal loans will be facing changes this year when they visit their university's financial aid office. The recent passage of a new student loan bill, known as the Student Aid and Fiscal Responsibility Act revamped the federal student loan program, changing things like how students will be able to get their loans and programs like the Pell Grant. The new measures under this law went into effect last July 1, and most college financial aid officers are trying to inform students and their families of the impacts of the new legislation.
The new law, for instance, ended the Family Education Loan Program (FELP), under which the federal government paid commercial banks to act as middle men between the government and the student borrower. Under the new measure, all federal loans will now be acquired from the US Department of Education through the Direct Loan Program. This should make the borrowing process clearer for many students. It will also lead to lower interest rates and better loan accessibility, since the measure removes the cost of having the banks facilitate the loans for the student.
The new measure also allows students to consolidate some federal loans even while they are still in college. Among those that qualify for consolidation are FELP loans issued by a private lender, Direct Loan Program loans, and FELP loans sold to the education department.
With money saved from eliminating the banks from the loan programs, the maximum Pell Grant for the next academic year is expected to go up to $5,550 from $5,350 last year. More students will also be eligible this year for the Pell Grant since the family contribution cutoff for a student's college education has been raised to $5,273 from $4,617.
Married couples where both spouses have loans also stand to benefit from the new student loan legislation. Under the new law, the couple's combined federal loan will be compared with their combined income to determine the amount of loan payment they must shell out. Previously, federal loans obtained by married people were treated separately while their incomes were combined. This resulted in most couples having to repay greater portions of their debts than they would have if they haven't been married in the first place.
Jul162010