What's New For Financial Aid?

President Bush and Congress recently passed the Deficit Reduction Act of 2005 that will greatly affect financial aid for college students beginning July 1, 2006.  A summary of those provisions are listed below.

Pell Grant

The maximum Pell Grant for 2009-2010 has increased to $5,350 from the $4,731.

Pell eligible students who had successfully completed a "rigorous" high school program (as determined by the state higher education agency and recognized by the Secretary of Education) and enrolled at last half-time in the first two years of a postsecondary program are now eligible to receive up to $750 for the first year and $1,300 for the second year in the newly created Academic Competitiveness Grant.

Pell eligible students who are majoring in physical, life, or computer sciences, mathematics, technology, engineering or a foreign language deemed critical for national security and enrolled at least half-time in the third or fourth years of a postsecondary program are now eligible to receive up to $4,000 for each year in the newly created National Science and Mathematics Access to Retain Talent Grant or National SMART Grant.

Both the Academic Competitiveness and National SMART grants are in addition to the student's Pell Grant award.

Stafford Loans

Beginning July 1, 2009, interest rates for Stafford loans disbursed on or after this date will be fixed at 5.6%.

Beginning July 1, 2009, Stafford loans originated on or after this date will have expanded annual loan limits.  They are as follows:

- Undergraduate freshman limit increased to $3,500 from $2,625
- Undergraduate sophomore limit increased to $4,500 from $3,500
- Graduate level unsubsidized limit increased to $12,000 from $10,000

In the FDLP, Stafford fees will be reduced on the following schedule:

- Dropped to 3% before July 1, 2007
- Dropped to 2.5% on July 1, 2007
- Dropped to 2.0% on July 1, 2008
- Dropped to 1.5% on July 1, 2009
- Dropped to 1.0% on July 1, 2010

PLUS Loans

Beginning July 1, 2006, the interest rate on PLUS loans disbursed on or after this date will be fixed at 7.90% for Direct Loans and 8.5% for FFEL PLUS origination and guaranty fees will remain at 3% and 1% respectively.

Previous Page