I received the following email. Anyone who is a student needs to look into this and see if it impacts them. I know that my Stafford Loans are a huge contribution to my financial aid. I’m lucky that I will be taking half-time classes this summer, so that I can still qualify. Plus, they are doubling (or nearly doubling) the fees on loans! I think that this change should have had news coverage. Please pass this on to all students!
CHANGES TO FEDERAL LOANS IN 2012-2013
Summary of changes:
1. Elimination of Subsidized Federal Direct Loan (formerly called Subsidized Stafford Loan)
2. Net loan fees increasing
3. Loss of interest subsidy during the 6-month grace period
In the 2012-2013 academic year, you will notice significant changes to your Direct Loan eligibility and fees. The changes are due to new legislation passed in 2011 by the U.S. Congress. These changes affect eligibility for the Subsidized Federal Direct Loan, the fees assessed on both the Direct Loan and Graduate PLUS Loan, and the loss of subsidy during the grace period on the Direct Loan.
1. SUBSIDIZED DIRECT LOAN (aka STAFFORD LOAN) PHASING OUT
The most notable change is the elimination of the subsidized form of the Direct Loan for graduate students. What this means is that the Subsidized Direct Loan is being phased out in the 2012-2013 academic year.
You may qualify for the Subsidized Direct Loan in 2012-2013 ONLY if you are enroll at least half-time in Summer 2012. If you will not be taking courses in Summer 2012 or will be less than half-time in Summer 2012, you will not be eligible for the Subsidized Direct Loan.
NOTE: Half-time status means taking at least 5 credits per semester.
If you will be half-time in Summer 2012, then you may qualify for the Subsidized Direct Loan for the entire 2012-2013 academic year (Summer 2012, Fall 2012, and Spring 2013) as long as you remain enrolled half-time for all the semesters.
This will be the last academic year you will be eligible for the Subsidized Direct Loan. No students will be eligible the following academic year (2013-2014) unless there is new Congressional legislation.
2. NET FEES INCREASING ON FEDERAL LOANS (DIRECT AND PLUS)
The net amount of origination fees assessed on federal loans (both the Direct Loan and Graduate PLUS Loan) will be increasing for most students in 2012-2013. The actual fees are not changing, but the federal government is eliminating the rebates on the fees. This affects the net amount of funds that will disburse to your student account at Simmons College
In the last academic year (2011-2012), the origination fee was 1.0% on the Direct Loan 4.0% on the Graduate PLUS Loan. If you received a federal loan, you received a rebate of 0.5% on the Direct Loan and 1.5% on the Graduate PLUS Loan, making the net fee 0.5% and 2.5%, respectively.
With the elimination of the rebates in 2012-2013, the net fees will be increasing to 1.0% on the Direct Loan and 4.0% on the Graduate PLUS Loan. For Summer 2012 applicants, the net fees you will see on your loan is dependent on the disbursement date. If you will be taking at least two courses that start before 7/1/12 and have completed all the requirements for disbursement, then you will continue to receive the rebates from the 2011-2012 academic year. For all other students, loans will disburse on or after 7/1/12 and you will see the higher net fees.
Here is a summary of the changes:
Loans Disbursing before 7/1/12
Loans Disbursing on or after 7/1/12
|Direct Loan Fee||
|Graduate PLUS Loan Fee||
3. LOSS OF INTEREST SUBSIDY ON THE FEDERAL DIRECT LOAN (aka STAFFORD LOAN) DURING GRACE PERIOD
You may remember from your Entrance Counseling session that the federal government covers your interest on the subsidized portion of your Direct Loan. In the past, the government continued to pay the interest during the 6-month grace period as well. This will be changing in 2012-2013.
If you qualify for the Subsidized Direct Loan in 2012-2013, your interest will not be subsidized during your 6-month grace period. What this means is that for any Subsidized Direct Loan you may receive in 2012-2013 when you graduate or drop below half-time status on that portion of the loan, the government will not pay the interest on that portion of the loan. Note that this does not apply to any Subsidized Direct Loan you received in 2011-2012 or any academic year prior to 2011-2012.