Federal Student Aid Changes for 2012-2013

Federal Student Loans for Graduate and Professional Students:

The Budget Control Act (BCA) of 2011 was signed into law on August 2, 2011. This Act makes two changes to the Federal Direct Stafford Loan  Program.

Loss of Subsidized Loan Eligibility for Graduate and Professional Students

Effective for loans made for periods of enrollment (loan periods) beginning on or after July 1, 2012, graduate and professional students are no longer eligible to receive Federal Direct Subsidized Loans. The terms and conditions of Direct Subsidized Loans received by any student for loan periods beginning before July 1, 2012, for either graduate or undergraduate study, are not affected by this change.

The annual loan limit for graduate and professional students remains unchanged at $20,500 ($47,167 for certain health professions students), but this amount will now be limited to Direct Unsubsidized Loans, as shown in the following chart:

The aggregate loan limit for graduate and professional students remains unchanged at $138,500 ($224,000 for certain health professions students), not more than $65,500 of which may be in subsidized loans.

The elimination of subsidized loan eligibility for graduate and professional students does not affect undergraduate student borrowers, who remain eligible to receive Direct Subsidized Loans.

• We certified a total of $8,871,970 in federal subsidized Direct Loans for 1,128 students enrolled  in Graduate and Professional Degree Programs at Loyola University New Orleans during the 2010 - 2011 academic year (including the 2011 summer session).
• A Graduate Student Burden - Inside Higher Ed (August 17, 2011)
• Examples of how these changes may work

 Termination of Direct Loan Borrower Repayment Incentives

With one exception as noted below, the Budget Control Act terminates the authority of the Department of Education (the Department) to offer any repayment incentives to Direct Loan borrowers to encourage on-time repayment of loans, including any reduction in the interest rate or origination fee, effective for loans first disbursed on or after July 1, 2012. As a result of this change, the up-front interest rebate that has been provided to Direct Loan borrowers at the time of their loan disbursement will no longer be offered on any Direct Loan Program loan with a first disbursement date that is on or after July 1, 2012 (this includes the Direct PLUS / Grad PLUS Program).

The law continues to authorize the Department to offer interest rate reductions to Direct Loan borrowers who agree to have payments automatically electronically debited from a bank account.

• No changes have been made to the variety of repayment plans and options open to borrowers.
• 2012-2013 Graduate and Professional Loan Limits ( a nice summary prepared by the National Association of Student Financial Aid Administrators )

Changes for Undergraduate Students

On December 23, 2011, President Obama signed into law the Consolidated Appropriations Act, 2012 (Public Law 112-74).  The new law significantly impacts the Federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended (HEA).  Learn about these changes.

Updated February 9, 2012