Monday, October 14, 2013

New Sequestration Changes Coming to Financial Aid

Announced on Friday, October 11, the Department of Education announced changes from the sequestration. There are some important things to note that have changed and some that haven't changed.

Firstly, Pell Grants are exempted from the sequestration changes for the remainder of the award year. No award amounts have been decided upon for the 2014-15 year yet, and they won't be until a bill providing an appropriation is enacted.

Secondly, campus-based programs (such as FSEOG) are not affected by the new changes either. As far as the 2014-15 award year's allocations are concerned, there is no information yet similar to the information regarding the Pell Grants.

Thirdly, there will be changes to the Iraq-Afghanistan Service Grant. According the letter from the Dept of Education, grant awards where the first disbursement is made on or after October 1, 2013, must be reduced by 7.2% from the original statutory amounts. Grant awards where the first disbursement was made after March 1, 2013, and before October 1, 2013, continue to be covered under the prior sequester and must be reduced by 10% from the original statutory award regardless of when any subsequent disbursement was made.

Fourthly, as of October 1, 2013, the sequester increases the origination fees for Direct Loans. Currently, the loan fees are set at 1.051% for Subsidized and Unsubsidized loans, and 4.204% for PLUS loans. The new loan fees will be 1.072% for Subsidized and Unsubsidized loans, and 4.288% for PLUS loans. These changes are more difficult to implement, so these changes will affect any new loans whose first disbursement is on or after December 1, 2013. Any new loans whose first disbursement was between July 1, 2013, and prior to December 1, 2013, will remain at 1.051% and 4.204%.

Another informative post from your friends at Metro Business College!

Monday, October 7, 2013

Why Should I Put my Email on My MPN?

On your Master Promissory Note (MPN), there is an optional line for you to enter your email address. Sometimes, students ask why they should enter it if it's optional. This is an option that is highly recommended you fill in.

Loan servicers are switching over to electronic services and messaging. You can pay your student loan bill online and manage your student loan account online. Email is just the next step in that. Loan servicers are trying to cut down on costs, and mailing out statements costs money in postage and paper, not to mention the ink to print them. Although they will mail you statements, they actually prefer to email statements which keeps their costs down.

Also, it's an attempt to meet the newest generation of student loan borrowers on their own terms. As technology continues to grow and the face to face conversations (and even voice to voice conversations) are going down, the student loan servicers are trying to converse with the borrowers in an impersonal manner such as email. So for those that have developed a phone phobia, the servicers are willing to accommodate for that, leaving no excuse not to get in touch with them. The servicers  want to hear from the borrowers, and email is just another way for that to happen.