Major Changes to Federal Student Loans

[marianne202]

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I just received this from one of my current schools. This could mean a big difference for those going on for graduate degrees. I thought I would share it in case it helps someone. Now I'm off to clarify how it effects a loan I have for my MHA which I will finish in a few weeks.

Loss of Subsidized Loan Eligibility for Graduate and Professional Students

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According to the Budget Control Act of 2011, graduate and professional studentsare no longer eligible to receive Federal Direct Subsidized loans effective for loansmade for loan periods beginning on or after July 1, 2012. This means that in orderto qualify for a Subsidized loan for 2012-2013, you must inform us of yourenrollment plans [/SIZE][SIZE=3]and [/SIZE][SIZE=3]submit all required loan documents for Summer, Fall, andSpring semesters prior to by June 1st to allow time for processing. Studentssubmitting loan documents or Enrollment Status forms after June 1st will not beeligible to receive Subsidized loans.

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End of Interest Subsidy During Post-graduation Grace Period

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According to Senate Appropriations Committee FY 2012 Labor-H spending bill, theinterest subsidy on undergraduate federal student loans has been eliminatedduring the six-month grace period following graduation in an effort to assist withPell Grant funding. This means that interest will begin accruing on Federal DirectStafford Subsidized loans immediately following the graduation of continuing

studies students.
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[bricabrac]

Interesting, I was not aware there were subsidized loans for graduate students. When I completed my FAFSA (2011-2012) it stated all grad/prof loans were unsubsidized at a standard 6.8% (which to me is still a great deal).

[CLEP101]

I'm glad I'm working my butt off now so my daughter doesn't have to deal with loans later on when she gets ready to go to school.

[bldclot2]

Good to know, thanks.

[RugbyMan187]

Thanks for the info.

[jmichelle79]

studies students.
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This is not good. It is bad enough as it is with loans considering the horror stories I have read. Now students will have no grace period to find employment before interst kicks in.

[marianne202]

I think what upsets me the most is that they are doing this changes to divert more money to Pell grants. As a community college teacher I see tons of abuse of the Pell grants that it makes me so angry. We have students that have literally used Pell grants to raise families as their source of income along with food stamps and unemployment etc. We have studnets who have been getting funding for close to 20 years and each year they just change to a new program. They barely show up to class and don't care to be there, they fail classes and they keep on giving them money, meanwhile my son can't get any money because my husband and I both work, but we can't afford to send him to a university. He might get a merit based scholarship, but those are used mainly for out of state students. It is so sad that they are short-changing the students with a track record or actually bettering themselves to help a group that abuses the system with no intention of bettering themselves. I would venture to say almost half of my students in each class fall into this group and it really makes you question moves like this. I think they need to have limits such as Pell only pays for books and tuition and you can only collect for a few semesters, long enough to obtain a degree. Then you have to keep progressing upwards, not laterally to get funding for another degree. I have some students that have multiple AS or AAS degrees just so they can keep getting Pell money. The worst part is none of them are working. I say the government is shifting the funding in the wrong direction. JMHO as an educator who sees a huge problem in the sytem.

[sanantone]

I see your point, but I think the government is focusing its resources on getting more people through undergraduate school, which is extremely important these days to survive in a knowledge economy. Getting a master's or doctorate is usually not necessary and the government shouldn't go into more debt just because someone wants a higher salary. I'm a master's student and I don't see anything wrong with working adults paying 100% of the costs for advanced degrees just like I don't expect health insurance to cover cosmetic surgery. Some people don't believe taxpayers should be paying at all for others to go to college or to subsidize public colleges. Six extra months of interest accumulation is not going to make much of a difference to individuals. You still have the 6-month grace period before you have to start paying.

The community college I attended only allows you to accumulate up to 90 credits without graduating and I think there is a limit to the number of degrees that can be obtained. If students are allowed to attend a CC for decades, then much of the blame lies with the school. The point of diverting more funds to Pell Grants is so that people like your son could possibly get assistance. As of now, most of the funds only go to the poorest families and there's not enough leftover for middle-class students. I came from a poor family, I used grants, and I now am a graduate student. It's not fair to stereotype all economically disadvantaged students. There are grant recipients who are bettering themselves.

[sanantone]

This is not good. It is bad enough as it is with loans considering the horror stories I have read. Now students will have no grace period to find employment before interst kicks in.

From my understanding, it does not say that the 6-month grace period has been eliminated. It says that the government will no longer pay the interest on subsidized loans during the grace period.

[alleycat]

Pell Grants were created by Clairborne Pell to help over come the gap in finanical aid for college students starting in 1972. Pell Grants are scholarships given to students from middle- to low-income families. Without help many people could never go to school. The school that Marianne is talking about is possibly using the system for their own gain. It keeps students in the pipelines allowing the school to collect money. It seems like the school is sort of like a predatory lender. Take advantage of the market and need. I actually had a friend quit her teaching job at a school because she thought the school had no right taking certain students money because they were never going to become employed in that field or make it through. These students did not stand a snowballs chance in hell in making it and the school pushed them through. That school received aid from the goverment. It is just like the mortage crisis. These large institutions that run the world preying on the uneducated and weak. Without the money these schools would not be running. Students are the ones that make everyone's salaries happen. So if people are so upset about what is going on then take a stand and say something to the people in the front office.

I actually feel sorry for families that actually need to live off of this sort of money. Which in reality does not equal alot of income. I do not believe that every student or the families of students receiving Pell money are deadbeat. Many people that I have seen using Pell, use it to get an education and move on with their lives. It is nothing more than a stepping stone. A much needed and appreciated stepping stone.

In my part of the country a full Pell Grant does not even cover one year of CC. Never mind books, travel and living expenses. Nobody here could actually live of the remaining balance because there would not be any. Funding for education is more then just tuition. They have to look at the complete picture of what it actually costs to go to school.