Changes to Federal Student Aid Programs

Changes to federal legislation have resulted in some significant changes in student aid programs for all college and university students. Review the information below, and if you have any questions about how the changes will impact you, please contact the UAA One Stop at the University Center at (907)786-1480 or call 1-800-4-FED-AID (1-800-433-3243).

1. FAFSA and same-sex marriage: As of December 2013, The U.S. Education Department will recognize the marriages of same-sex couples for the purposes of distributing federal financial aid. All students completing the 2014/15 Free Application for Federal Student Aid (FAFSA) must include their spouse's information if they are legally married, regardless of their spouse's gender. Parents of dependent students must also do the same. For students who wish to update their 2013/14 FAFSA, please contact the Office of Student Information for instructions.

2. Federal Pell Grant Eligibility: Eligibility for Federal Pell grants has been restricted to 12 semesters of full-time enrollment, or the equivalent for part-time students. If you have been a full-time student and have received Pell grants for 12 semester, by law you cannot receive another one. Eligibility is pro-rated for part-time attendance. This affects current and future students.

3. Teacher Education Assistance for College and Higher Education (TEACH) Grants
The Federal TEACH Grant programs provides grants to students who are completing, or plan to complete, coursework needed to begin a career in teaching and agree to teach, for at least four complete academic years, in a high-need field at an elementary school, secondary school, or educational service agency that serves students from low-income families. Due to the federal sequester, award amounts for any Federal TEACH Grant that was first disbursed between March 1, 2013 and September 30, 2013 must have been reduced by 6 percent from the award amount for which a recipient would otherwise have been eligible. For example, the maximum award of $4,000 is reduced by $240, resulting in a maximum award amount of $3,760. For awards disbursed on or after October 1, 2013, the award must be reduced by 7.2 percent from the award amount for which a recipient would otherwise have been eligible. For example, the maximum award of $4,000 is reduced by $288 resulting in a maximum award amount of $3,712.

4. High School Diploma or GED required for aid eligibility: Beginning July 1, 2012, only students who hold a valid high school diploma or GED can receive state or federal financial aid. If you are a current UAA student and admitted under the Ability to Benefit (ATB) policy, you can and will continue to receive federal aid.


Changes to the Federal Loan Programs

1. 150 Percent Direct Loan Limitation: As of July 1, 2013, first-time Federal Direct Student Loan borrowers (i.e. students who have no outstanding balance of principal or interest on a Federal Direct or FFEL Loan on July 1, 2013 or on the date the borrower obtains a Direct Loan after July 1, 2013) are no longer eligible to receive additional Direct Subsidized Loans if the borrower exceeds 150% of the published length necessary to graduate with an undergraduate degree program. The borrower also becomes responsible for accruing interest during all periods as soon as they exceed the 150 percent limit. Example: a student enrolled in a two-year program will have three years' worth of subsidized loan eligibility and a student enrolled in a four-year program will have six years' worth of subsidized loan eligibility.

Part-Time Students: Part-time or part-year attendance affects how usage is calculated. The Department of Education will use a formula that relates the number of days in the borrower's loan period to the number of days in the academic year (defined as fall/spring for most students, or fall/spring/summer for students borrowing during the summer semester). Students that attend full time for the entire academic year have a fraction equal to one, which means the student has used one year's worth of subsidy. Students attending less than full-time have their fractions adjusted based on their attendance.

Transfer Students: A student who transfers between programs does not reset his or her eligibility. Loans borrowed for the previous program will count against the student's current limit. For example: a student receives three years of subsidized loans for a two-year program, then transfers into a four-year program. For the four-year program, the student's maximum eligibility period is six years, but she has already used up three years of eligibility, so she has three years of subsidized eligibility remaining while in the four-year program. Students that transfer into a program of study that is shorter than his or her previous program may not have remaining subsidized eligibility. Example: a student who completed a four-year program and borrowed subsidized loans each of those years and then returns to school for a two-year program would have no remaining subsidized eligibility since he received subsidies for four full years already.

There is no appeal process for this regulation.

For additional information, please refer to the Federal Student Aid website.

2. Graduate and Professional Students Only: Beginning July 1, 2012, all graduate and professional students will lose the interest subsidy on Direct Subsidized Loans. The graduate Direct loan program will become entirely unsubsidized, which means the loan will accrue interest while a student is in school. These changes will not affect the annual and aggregate borrowing limits. The maximum amount a student can borrow will remain at $20,500 per academic year.

3. Loss of interest rate reduction: Borrowers who pay their loans electronically while in repayment will no longer receive an interest rate reduction of .25%.

 4. Federal Direct Loan Origination Fee increases: While the federal sequester does not otherwise change the amount or terms of Federal Direct Loans, it did raise the loan fee paid by borrowers for Federal Direct Loans first disbursed after October 1, 2014. 
  • For Federal Direct Subsidized or Federal Direct Unsubsidized Loan, the loan fee increased from 1.052 percent of the principal amount of a loan to 1.072 percent for those disbursed between December 1, 2013 and October 1, 2014. For those loans disbursed on or after October 1, 2014, the fee has further increased to 1.073. 
  • For Federal Direct Plus Loans for both parent and graduate student borrowers, the loan fee will increase from 4.288 percent to 4.292 percent. 

5. Loss of interest subsidy on Federal Direct Subsidized Loans during the six-month grace period: Subsidized loans are loans for which the borrower is not responsible for the interest while the student is enrolled in college on at least a half-time basis, when the loan is in the six-month grace period after the student is no longer enrolled at least half-time, or if the loan is in a deferment status. A federal provision eliminates the interest subsidy provided during the six-month grace period for subsidized loans for which the disbursement is made on or after July 1, 2012, and before July 1, 2014. If you receive a subsidized loan during this timeframe, you are responsible for the interest that accrues while your loan is in the grace period. You do not have to make payments during the grace period (unless you choose to), but the interest will be capitalized (added to the principal amount of your loan) when the grace period ends. This provision does not eliminate the interest subsidy while the borrower is in school or during eligible periods of deferment.

6. Interest rate increases for subsidized loans: As of July 1st, 2013, interest rates on new subsidized loans will be 6.8%. Please see for more information.