Budget Control Act of 2011 Changes to Federal Student Loans for Summer 2012 and Academic Year 2012-2013
This information was taken directly from a Dear Colleague letter (Gen-11-16) issued by the U.S. Department of Education to all colleges and universities regarding the changes to the Federal Direct Loan Programs starting summer 2012.
Loss of Subsidized Loan Eligibility for Graduate and Professional Students
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All graduate level students including graduate students in Medical, Law, Nursing and Pharmacy programs.
Effective for loans made for periods of enrollment (loan periods) beginning on or after July 1, 2012, graduate and professional students are no longer eligible to receive Federal Direct Subsidized Loans. The terms and conditions of Direct Subsidized Loans received by any student for loan periods beginning before July 1, 2012, for either graduate or undergraduate study, are not affected by this change.
The annual loan limit for graduate and professional students remains unchanged at $20,500 ($47,167 for students in certain health professions), but this amount will now be limited to Direct Unsubsidized Loans, as shown in the following chart:
| Annual Loan Limits for Graduate/Professional Students | |||||
| Loans for loan periods beginning before July 1, 2012 | Loans for loan periods beginning on of after July 1, 2012 | ||||
| Subsidized Loan Maximum | Unsubsidized Loan Maximum | Subsidized Loan Maximum | Unsubsidized Loan Maximum | ||
| All Graduate and Professional Students | $8,500 | $20,500, less any subsidized amout received | $0 | $20,500 | |
| Certain Health Professions Students | $8,500 | $47,167, less any subsidized amount received | $0 | $47,167 | |
The aggregate loan limit for graduate and professional students remains unchanged at $138,500 ($224,000 for students in certain health professions), not more than $65,500 of which may be subsidized.
Undergraduate Students are not affected by the termination of Subsidized Loans
The elimination of subsidized loan eligibility for graduate and professional students does not affect undergraduate student borrowers who remain eligible to receive Direct Subsidized Loans.
Termination of Direct Loan Borrower Repayment Incentives
- This provision affects all discount fee rebates for both undergraduate and graduate level students
The law continues to authorize the Department of Education to offer interest rate reductions to Direct Loan borrowers who agree to have electronic payments automatically debited from a bank account
Major Federal Direct Loan Processing Changes for UA Students from 2011-2012
- Students graduating in August 2012 will not be allowed to use 2012-2013 Federal Direct Loan eligibility to fund Summer expenses. For example, if you used all your 2011-2012 loan eligibility in Fall and Spring, you will not have loan eligibility for Summer 2012.
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No students will be allowed to use Fall 2012 federal aid to pay any prior year charges above $200 (Summer 2012 at UA is a prior academic year). This means you cannot use Fall 2012 to cover any past due balances from Summer 2012 as in the past.
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All 2011-2012 Federal Direct Loans must be accepted and disbursed before June 30, 2012 in order to receive loan discounts.
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Examples of common items that can stop a disbursement are: incomplete To Do items, failure to meet Satisfactory Academic Progress (SAP) standards, less than half-time enrollment status, failure to complete loan entrance counseling and/or failure to complete Master Promissory Note (MPN).