Financial Aid News
Market-Rate Loan Deal Signed
On August 9, President Obama signed the Bipartisan Student Loan Certainty Act of 2013 which ties the interest rate for federally backed education loans to the 10-year Treasury note.
Under the old federal student loan program, borrowers were offered a fixed rate. Under the new rate structure, loans to undergraduates and graduate students, along with parents in the PLUS program, would be subject the rate for the 10-year Treasury note plus a fixed rate of 2.05 percent for undergraduate Stafford (subsidized and unsubsidized), 3.6 percent for graduate Stafford, and 4.6 percent for PLUS (parents and graduate students).
Rates for new loans for the fall of 2013 will be 3.86 percent for undergraduates, 5.41 percent for graduate students and 6.41 percent for those receiving PLUS loans. The new legislation sets an interest cap on all loans: 8.25 percent for undergraduates, 9.5 for graduate students and 10.5 for PLUS recipients. Loans would be “variable-fixed,” meaning students would receive a new rate with each new loan, but the rate would be fixed for the life of that loan.
What does sequestration mean for your financial aid?
The following programs may be affected by the series of automatic across-the-board cuts. Learn More
Federal Pell Grant Program
The Pell Grant Program is specifically exempted from the effects of the sequester.
FWS and FSEOG Programs
These programs are not affected by the sequester at SUNY Potsdam.
Direct Loan Programs
The terms of the sequester will result in a second increase to loan fees charged to Direct Loan borrowers. For loans with a first disbursement on or after December 1st, 2013 and before October 1st, 2014:
- The loan fee for Direct Subsidized Loans and for Direct Unsubsidized Loans is increased from 1.051 percent to 1.072 percent. For example, the fee on a $5,500 loan will increase by $1.16 from $57.80 to $58.96.
- The loan fee for Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers) is increased from 4.204 percent to 4.288 percent. For example, the fee on a $10,000 PLUS Loan will increase by $8.40 from $420.40 to $428.80.
The terms of the sequester increase the loan fees charged to Direct Loan borrowers. For new loans disbursed after March 1, 2013 and before December 1st, 2013:
- The loan fee for Direct Subsidized Loans and for Direct Unsubsidized Loans is increased from 1.0 percent to 1.051 percent. For example, the fee on a $5,500 loan will increase by $2.80 from $55.00 to $57.80.
- The loan fee for Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers) is increased from 4.0 percent to 4.204 percent. For example, the fee on a $10,000 PLUS Loan will increase by $20.40 from $400.00 to $420.40.
- The Department began sending email (and where necessary, paper) notifications on March 9, 2013 to student and parent borrowers who have a Direct Loan with a first disbursement after March 1, 2013.
- If necessary, the Department will work with borrowers to collect any difference between the fee that was applied to the disbursement of their Direct Loan and the increased fee required by the sequester.
Iraq-Afghanistan Service Grants
The Iraq-Afghanistan Service Grant Program is subject to an across-the-board budget cut under the sequester. Iraq-Afghanistan Service Grant awards that are subject to the sequester require reductions of 10 percent from the award amount for which the student would otherwise have been eligible.
TEACH GrantsThe TEACH Grant Program is subject to an across-the-board budget cut under the sequester.
The reductions only apply when the first disbursement of a TEACH Grant award is made after March 1, 2013. Second or other subsequent disbursements of a TEACH Grant award for which the first disbursement was made on or before March 1, 2013 are not subject to the sequester required reduction.
TEACH Grant awards that are subject to the sequester, require reductions of 6 percent from the award amount for which the student would otherwise have been eligible.
New: TEACH Grants first disbursed on or after October 1st , 2013, require reductions of 7.2 percent from the award amount for which the student would have otherwise been eligible.
Military tuition assistance(TA)
The program of tuition assistance to service members was suspended in March, 2013, for those filing new requests for tuition assistance. However, on March 21, the Senate voted to prevent cuts to the program at this time.