Students who struggle to fund their education may find it even more difficult next year as the federal government is implementing major changes to financial aid. The 4,300 University of Idaho students who receive Pell Grants may also be affected by the change. From rising interest rates and origination fees to limiting eligibility, students are going to pay more on their loans compared to their peers who are joining the work force. The Director of Financial Aid Dan Davenport said he believes most of these changes are related to the federal budget.
“I think that every one of these, with the exception of the 75 percent one, came out of the budget, federal budget reduction issues,” Davenport said. “It is all tied back to cuts in the federal budget.”
Interest rates for subsidized loans will double from 3.4 percent to 6.8 July 1, 2012. Interest will begin to accrue as soon as a loan is initiated, rather than after the six-month grace period.
The “75 percent one” Davenport alluded to refers to
a new requirement for satisfactory progress before students are awarded financial aid. Before the change, a student had to complete 75 percent of their attempted credits each year. Under the new rules a student will be judged on his or her cumulative attempted credits, meaning that their entire college career will determine financial eligibility.
Davenport said if a student falls below 75 percent he or she would be suspended, but allowed to file an appeal, which would allow them to make an academic plan to get up to that acceptable level.
Davenport said students could get in trouble if someone in their first year were to finish their first semester and then have to take medical leave for the following semester. He said ultimately, they would end up in this predicament, even if they were a 4.0 student.
“We have the ability to say ‘ok we realize that there were some issues, but things are back on track — you now have three semesters, or whatever they pick, to bring it back to the 75 percent,'” Davenport said.
Major changes are also going to take place in regard to Pell Grants. Students have to enroll at least half-time to receive the grants, an increase from the previous one-class requirement.
Also, students can only access the grant for 12 semesters. Davenport said he is concerned that some students who are already nearing those 12 semesters of eligibility may run into problems this summer when the changes take effect.
“The hard part right now for us is there is nothing at this time — there will be as we get later into the spring and into the summer — that can tell us what the number of semesters a student has received in Pell Grant” Davenport said. “I don’t know how many students are going to get caught up in it at all, but if they find someone who has already received 12 semesters of Pell they’re not going to be eligible for any more.”
He said the federal government is going to look through records dating back to 1973 to see how many semesters of Pell Grant aid students have taken so far, and if a student falls under that criteria their eligibility will be gone.
“We are going to do everything we can to try and get them the information as early as the Feds can get it to us, we also may identify some students who are close and contact them,” Davenport said.
Federal origination fees are also going to increase this year and undergraduates will see fees for direct subsidized and unsubsidized loans go from .5 percent to 1 percent. Parents and graduate students will see a hike for their origination fees from 2.5 percent to 4 for the PLUS loan program.
Graduate students will also be affected by these new rules in another form, as graduate and professional students with a bachelor’s degree will no longer get Direct Subsidized Loans. The amount of subsidized loans graduate students had been able to take out will be added to the amount of unsubsidized they can receive.
While these changes are going to have a great effect on many students, some will take it with a grain of salt like senior Eric Sprague who is studying mechanical engineering.
Sprague said he acknowledges that he may be in the minority in this case but he thinks that some of these changes could improve how financial aid helps students to get through school in a fair amount of time.
“If you cut off someone who has been here for a little too bloody long there is more money for the people who more or less need it — back when I was a freshman, having that Pell Grant money…was extremely helpful,” he said.
Jake Dyer can be reached at [email protected]