As a result of far-reaching changes in financial aid grant and loan programs low-income students and recent college graduates may reap dramatic gains which will begin form July 1st.
While attention has been received by some of the gains such as a significant hike in Pell Grants. Among all other changes one of the most significant changes is the introduction of income-based repayment. With these incomes based repayments students can considerably reduce their monthly payments which are based on their earnings. This has been done to help particularly the graduates in low-paying public service jobs.
It has been said by Edie Irons who is the spokeswoman for the Project on Student Debt in Berkeley, Calif that it is estimated by them that hundreds of thousands will take advantage of this, but it is not automatic, students shall have to apply to avail this.
A detailed chart has been published by The U.S. Education Department about how certain borrowers may be affected by income-based repayment or IBR for short. For instance, a single person whose per year earning is $20,000 would face a monthly repayment of only $47. Each year adjustments may occur based on earnings and debt.
Consolidation loans are another major change. Borrowers having variable-rate loans before July 2006 could be converted into consolidation loans having interest rates as low as 2 percent as said by Kantrowitz. These changes are applied to those with variable Stafford or PLUS loans.
Following are some other financial aid changes that are going to take place next month:
Pell Grants:For needy students the maximum grant will increase from $4,731 to $5,350 which means an increment of more than $500. Legislation has been approved by Congress, after that year-round grants will be allowed to students seeking to accelerate their education.
New student loans: The interest rates of new fixed-rate Stafford Loans will drop from 6 percent to 5.6 percent. There is also a drop by half-a-percentage point on the origination fees on Stafford Loans.
Part-time students: Those students who are enrolled at least half time, will get access to the Academic Competitiveness and SMART Grant programs, this will provide an additional aid to Pell-eligible students who have completed a rigorous high school program.
