Federal Aid Changes
Changes to Federal Aid in 2018–19
The office of financial aid would like to share with you a number of changes to student federal loans and grants for the 2018–2019 academic year.
New Federal Student Loan Interest Rates
The Bipartisan Student Loan Certainty Act ties the interest rate for federal student loans to the yield on the U.S. Treasury 10-year borrowing rate. The Act, which affects federal student loans that are first disbursed on or after July 1, 2013, establishes a cap for the maximum interest that can be charged for federal student loans.
The interest rate for Subsidized and Unsubsidized Stafford Loans first disbursed as of July 1, 2018 through June 30, 2019 is 5.045% with a cap rate of 8.25%The interest rate for a Parent PLUS loan first disbursed as of July 1, 2018 through June 30, 2019 is 7.595% with a cap of 10.5%
The interest rate for an Unsubsidized Stafford Loan as of July 1, 2018 through June 30, 2019 is 6.595% with a rate cap of 9.5%The interest rate for a Grad PLUS loan as of July 1, 2018 through June 30, 2019 is 7.595% with a rate cap of 10.5%
Federal Pell Grant Program
The maximum Pell Grant award for 2018-19 has increased to $6,095. Pell grant eligibility is calculated based on your Estimated Family Contribution (EFC). The maximum EFC to be Pell eligible during the 2018-19 year is 5,486. Once you have received a Pell Grant for 12 semesters, or the equivalent, you will no longer be eligible for additional Pell Grants.
Equivalency is calculated by adding together the percentage of your Pell eligibility that you received each year to determine whether the total amount exceeds 600%. If you have exceeded the 600% maximum, you will lose eligibility for additional Pell Grants beginning in the 2012–2013 school year.For example, if your maximum Pell Grant award amount for the 2010–2011 school year was $5,550, but you only received $2,775, you would have used 50% of your maximum award for that year. If you then receive 75% of your eligibility in the next year, the total received in two years would be 125% out of the total 600% lifetime limit.
Federal Direct Loan Programs
The loan fee for Direct Subsidized or Direct Unsubsidized loans first disbursed on or after October 1, 2017 and before October 1, 2018 is 1.066%.The loan fee for Direct PLUS loans first disbursed on or after October 1, 2017 and before October 1, 2018 is 4.264%.
Changes to the 2018-19 FAFSA Verification
The Department of Education has implemented that parents of dependent students, along with independent students, who did not file and were not required to file taxes in 2016, must provide an IRS Verification of Non-filing Letter as part of the verification process.
IRS Data Retrieval Tool (DRT)
The Internal Revenue Service (IRS) has turned the IRS DRT back on for the 2018-19 award year. Starting October 1, 2017, students can use the IRS DRT to complete the 2018-19 FAFSA form.
One of the enhancements made to the IRS DRT for 2018-19 was to mask any financial information transferred from the IRS website into the FAFA to protect sensitive data. Since this transferred information is no longer visible, student and parents will see “Transferred from the IRS” in the appropriate fields on fafsa.gov, the IRS DRT webpage, and on their Student Aid Report.
In addition, more applicants and parents will be eligible to use the IRS DRT since amended tax filers are now able to transfer their IRS tax return information from their original tax return into the FAFSA form.
Important Information from Prior Award Years
Earlier Release of the FAFSA and Prior-Prior Year (PPY)
In order to make the FAFSA easier to fill out, more accurate, and to get families information on their aid packages earlier, the White House announced that the FAFSA will now be available on October 1st of each year, rather than the following January 1st. Additionally, families will use the previous year’s completed tax information. The 2017-18 FAFSA, available now, came out on October 1, 2016 and requires 2015 tax information. For more information on how these changes help students, please watch this short video.
2015 Tax Information Used Again
Because the 2017-18 FAFSA is the first application to require prior-prior year tax information, both the 2016-17 FAFSA and 2017-18 FAFSA require 2015 income information to be reported. Since the information is from the same tax year, financial aid administrators may contact you for additional information to resolve any conflicting financial data between the two FAFSA applications.
Clarification on Dependency Overrides
The Department of Education added clarification to specify that students who are refugees from war-torn or turbulent countries might present circumstances that warrant a dependency override and that documentation may be difficult to obtain in such circumstances.
New FSA Feedback System
On July 1st, 2016, the Department of Education announced a new feedback system for students, parents, and others to report complaints, positive feedback, or suspicious activity relating to federal student aid activities. This system is active now and can be accessed here.
FSA ID/PIN Replacement
Beginning on May 10th, 2015, the Department of Education introduced the FSA ID to replace the Federal Student Aid PIN system. It is a new username and password system that students, parents, and borrowers are required to use to access U.S. Department of Education financial aid documents, including the FAFSA. The purpose of this FSA ID is to confirm your identity and to allow you to electronically sign and submit federal student aid documents. A step by step guide to creating your FSA ID can be found here.
150% Direct Subsidized Loan Limit
First-time borrowers after July 1, 2013 are subject to the 150% Subsidized Loan Limit. To remain eligible for subsidized student loans, a student must complete their program in 150% of the published length of the program. If a student takes longer than 150% of the published program length to complete it, the student will no longer be eligible to receive subsidized student loans. The student will still be eligible for unsubsidized loans.
For example, if you enroll in a 4-year bachelor’s degree program, you can receive subsidized loans for up to 6 years (150% of 4 years = 6 years). For more information on the time limitation on direct subsidized loans, click here.
Please contact our office of financial aid at firstname.lastname@example.org or via phone at 312.752.2070 if you have specific questions about the impact of the sequester on your federal financial aid program. Additional information is also available at www.studentloans.gov.