July 1, 2012 was marked as a monumental day for borrowers who are currently receiving student loans to attend college or will be in the future. The new legislation requirements will impact borrowers who will be receiving funding for the school year after July 1, 2012 through June 30, 2012 and in the future. Here are 5 student loan changes that you should know, some of these changes may impact your ability to attend college or repay your student loans.
- Incoming high school students – In the past, students who did not receive a high school diploma or a GED were allowed to receive federal student loans, if the student had passed an approved test or completed at least six credit hours or 225 clock hours of post secondary education. Now with the new legislation, in order for a student to receive Federal Aid, the student has not have received a high school diploma, a General Educational Development certificate (GED) or have been home schooled.
- Family Contribution – The Expected Family Contribution, determines what your eligibility will be to receive federal student aid. For the 2012-13 school year, if your family income did not exceed $23,000 you automatically qualified for an Expected Family Contribution of zero, in the previous years the maximum income of $32,000.
- Pell Grant Program Eligibility - Beginning in the 2012-2013 school year students can only receive a Pell Grant for up to 12 semesters. Pell Grant eligibility is widely based on the amounts of hours that you are enrolled in school, which is will determine if you have exhausted your limit.
- Graduate and Professional Students - Graduate and professional students are no longer eligible to receive subsidized loans, this mandate will begin on or after July 1, 2012. Graduate and professional students may still qualify for up to $20,500 in unsubsidized loans each year.
- Repayment Options – Loans that are first disbursed on or after July 1, 2012, the Department of Education is prohibited from offering any repayment incentives to Direct Loan borrowers. The only repayment relief is the interest rate reductions to the borrower if they agree to have the payments automatically electronically debited from their bank account.