Every year, many of the federal financial aid regulations are up for review and approval by the federal government. The government maintains the right to modify all Title IV federal student aid regulations at any time during the year should there be budgetary or regulation issues that need to be addressed immediately. The Financial Aid Office will be able to answer any specific questions regarding how these changes might or might not affect you and your financial aid award for the upcoming school year.
The White House releases data on how student debt relief will benefit borrowers
The White House released data on how the Biden-Harris Administration’s plan for student debt relief will benefit borrowers in all fifty states, Washington, D.C., and Puerto Rico.
The student debt relief plan will allow borrowers and families to continue to recover from the pandemic and prepare to resume student loan payments in January 2023.
President Biden plans to provide up to $20,000 in debt relief to Pell Grant recipients and up to $10,000 to other borrowers. Loans held by the U.S. Department of Education disbursed on or before June 30, 2022 are eligible.
Nearly 90% of relief dollars will go to single and head of household individuals earning less than $75,000 per year and married couples with a combined income of less than $125,000 per year. No relief will go to any individual or household in the top 5% of incomes in the United States. The Administration estimates that over 40 million borrowers are eligible for debt relief and nearly 20 million will have their entire remaining balance discharged.
In the coming weeks, the Department of Education will release additional details on how individuals can benefit from the Administration’s student debt relief plan. For more information, visit: StudentAid.gov/debtrelief.
Biden – Harris Administration announce student loan forgiveness plan and extension of pause on federal loan payments until December 31, 2022
On Wednesday, August 24, 2022, the Biden-Harris administration announced that it would cancel $10,000 in student loan debt for borrowers making less than $125,000 annually or families making less than $250,000 annually. Borrowers who received Pell grants will receive an extra $10,000 — totaling to $20,000 in forgiveness. Additionally, the administration announced that it would extend the pause on payments and interest accrual for federally-held student loans through the end of the year, until Dec. 31, 2022.
The Department of Education (The Department) will announce further details on how borrowers can claim this relief in the weeks ahead. The application will be available no later than when the pause on federal student loan repayments terminates at the end of the year. Visit https://studentaid.gov/debt-relief-announcement/ for additional information and to sign up for updates from the Department regarding debt relief.
New Income Driven Payment Plan
The Department is proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers. The proposed rule would protect more income from loan payments. It would cut in half—from 10% to 5% of discretionary income—the amount that borrowers have to pay each month on their undergraduate loans, while borrowers with both undergraduate and graduate loans will pay a weighted average rate. It would also raise the amount of income that is considered nondiscretionary income and therefore protected from repayment. The rule would also forgive loan balances after 10 years of payments, instead of the current 20 years under many income-driven repayment plans, for borrowers with original loan balances of $12,000 or less. Additionally, the proposed rule would fully cover the borrower’s unpaid monthly interest, so that—unlike with current income-driven repayment plans—a borrower’s loan balance will not grow so long as they are making their required monthly payments. The plan would also simplify borrowers’ choices among loan repayment plans.
Proposed Changes to the Public Service Loan Forgiveness Program
The Department is also proposing long-term changes to the Public Service Loan Forgiveness (PSLF) program that will make it easier for borrowers working in public service to gain loan forgiveness. Specifically, the Department proposed allowing more payments to qualify for PSLF including partial, lump sum, and late payments, and allowing certain kinds of deferments and forbearances – such as those for Peace Corps and AmeriCorps service, National Guard duty, and military service – to count toward PSLF.
To apply for forgiveness or payments to count toward forgiveness under the temporary changes, visit the PSLF Help Tool.
Public Service Loan Forgiveness Program Transitioning from FedLoan Servicing to MOHELA
Beginning early this summer 2022, Federal Student Aid (FSA) will start transitioning federal student loans currently held by FedLoan Servicing to MOHELA. This change is required because FedLoan Servicing announced that it will stop servicing federal student loans when its contract ends. This transition is expected to continue through the summer until early fall.
This change will not impact the existing terms, conditions, interest rates, loan discharged or forgiveness programs or available repayment plans on the loans. It will also not change the temporary suspension and 0% interest benefits borrowers are currently receiving.
What you should expect during the transition
If you are a PSLF borrower, you should expect to receive several notices as your account is transferred. This includes a notice of a transfer from FedLoan Servicing at least 15 days before the transfer occurs, followed by a welcome notice from MOHELA once the transfer is complete. You will also receive pre- and post-transfer notices.
PSLF discharges for borrowers who meet all eligibility requirements will continue to occur during the transfer timeframe. If you are a PSLF borrower and your loans are forgiven during this transfer timeframe, you will not be included in the transfers.
Finally, if you submitted a PSLF form for the first time after May 1, 2022, your form will be sent to MOHELA for processing after July 1, 2022. Once your PSLF form is processed, your account will be transferred from your current servicer to MOHELA.
For the most up-to-date information please visit StudentAid.gov/fedloan.
PSLF Waiver Offers a Way to Get Closer to Loan Forgiveness
On Oct. 6, 2021, the U.S. Department of Education (ED) announced a change to Public Service Loan Forgiveness (PSLF) program rules for a limited time as a result of the COVID-19 emergency. Throughout the emergency, ED has provided a variety of benefits to borrowers.
Now, for a limited time, borrowers may receive credit for past periods of repayment that would otherwise not qualify for PSLF. But you do continue to need qualifying employment.
New Rules for Qualifying Payments
- Any prior period of repayment will count as a qualifying payment, regardless of loan program, repayment plan, or whether the payment was made in full or on time.
- Applies to borrowers with Direct Loans, those who have already consolidated into the Direct Loan Program, and those who consolidate into the Direct Loan Program by Oct. 31, 2022.
- Periods of repayment on parent PLUS loans are not eligible under the limited PSLF waiver.
This change will apply to borrowers with Direct Loans, those who have already consolidated into the Direct Loan Program, and those who consolidate into the Direct Loan Program by Oct. 31, 2022.
Requirements to receive additional qualifying payments:
- You must have worked full time for a qualifying employer during the calendar month you were also in repayment on your loan. You can receive credit only for periods of repayment after Oct. 1, 2007, when the PSLF Program began.
- If you have Federal Family Education Loan (FFEL) Program loans, Federal Perkins Loans, or other types of federal student loans, you must consolidate those loans into the Direct Loan program by Oct. 31, 2022.
For more information, please visit https://studentaid.gov/announcements-events/pslf-limited-waiver?utm_source=mcp&utm_medium=email&utm_campaign=pslf_waiver_may22
Biden-Harris Administration Extends Student Loan Pause Through August 31
Today, the U.S. Department of Education (Department) announced an extension of the pause on student loan repayment, interest, and collections through August 31, 2022. While the economy continues to improve and COVID cases continue to decline, President Biden has made clear the continuing need to respond to the pandemic and its economic consequences, as well as to allow for the responsible phase-down of pandemic relief.
The extension will provide additional time for borrowers to plan for the resumption of payments, reducing the risk of delinquency and defaults after restart. During the extension, the Department will continue to assess the financial impacts of the pandemic on student loan borrowers and to prepare to transition borrowers smoothly back into repayment. This includes allowing all borrowers with paused loans to receive a “fresh start” on repayment by eliminating the impact of delinquency and default and allowing them to reenter repayment in good standing. The Department will also continue to provide loan relief, including to borrowers who have been defrauded by their institutions and those eligible for relief through the Public Service Loan Forgiveness program. FSA will establish new partnerships to ensure that borrowers working in public service are automatically credited with progress toward forgiveness, eliminating paperwork that prevents many borrowers from getting help. FSA will also continue to transfer loans to servicers committed to working under new, stronger accountability rules.
“The Department of Education is committed to ensuring that student loan borrowers have a smooth transition back to repayment,” said U.S. Secretary of Education Miguel Cardona. “This additional extension will allow borrowers to gain more financial security as the economy continues to improve and as the nation continues to recover from the COVID-19 pandemic. It remains a top priority for the Biden-Harris Administration to support students, families, and borrowers – especially those disproportionately impacted by the pandemic. During the pause, we will continue our preparations to give borrowers a fresh start and to ensure that all borrowers have access to repayment plans that meet their financial situations and needs.”
More information about the payment pause and supports for borrowers can be found at StudentAid.gov.
Today’s action is one in a series of steps the Biden-Harris Administration has taken to support students and borrowers, make an education beyond high school more affordable, and improve student loan servicing. In just over one year, the Department has provided over $17 billion in targeted loan relief to over 700,000 borrowers. Actions within that include:
Revamping the Public Service Loan Forgiveness program in October, which has already allowed the Department to identify more than 100,000 borrowers eligible for $6.4 billion in loan relief. As part of that effort, the Department implemented a Limited PSLF Waiver to count all prior payments made by student borrowers toward PSLF, regardless of the loan program. Borrowers who are working in public service but have not yet applied for PSLF should do so before October 31, 2022, and can find out more at StudentAid.gov/PSLF.
Providing $7.8 billion in relief for more than 400,000 borrowers who have a total and permanent disability.
Approving $2 billion in borrower defense claims to approximately 107,000 borrowers, including extending full relief to approved claims and approving new types of claims.
Providing $1.26 billion in closed school discharges to 107,000 borrowers who attended the now-defunct ITT Technical Institute.
Helping 30,000 small business owners with student loans seeking help from the Paycheck Protection Program.
AY2022-2023 Federal DIRECT LOAN INTEREST RATES (July 1, 2022 through June 30, 2023)
- Direct Unsubsidized Loan Fixed Interest Rate is 6.54%
- Direct Graduate PLUS Fixed Interest Rate is 7.54%
AY2021-2022 Federal DIRECT LOAN INTEREST RATES (July 1, 2021 through June 30, 2022)
- Direct Unsubsidized Loan Fixed Interest Rate is 5.28%
- Direct Graduate PLUS Fixed Interest Rate is 6.28%
Federal DIRECT LOAN ORIGINATION FEES (for loans first disbursed on or after October 1, 2021 and before October 1, 2022)
- Direct Unsubsidized Loan Origination Fee on or after October 1, 2021 is 1.057%
- Direct Graduate PLUS Loan Origination Fee on or after October 1, 2021 is 4.228%
AY2020-2021 Federal DIRECT LOAN INTEREST RATES (July 1, 2020 through June 30, 2021)
- Direct Unsubsidized Loan Fixed Interest Rate is 4.30%
- Direct Graduate PLUS Fixed Interest Rate is 5.30%
Federal DIRECT LOAN ORIGINATION FEES (for loans first disbursed on or after October 1, 2020 and before October 1, 2021)
- Direct Unsubsidized Loan Origination Fee on or after October 1, 2020 is 1.057%
- Direct Graduate PLUS Loan Origination Fee on or after October 1, 2020 is 4.228%
AY2019-2020 Federal DIRECT LOAN INTEREST RATES (July 1, 2019 through June 30, 2020)
- Direct Unsubsidized Loan Fixed Interest Rate is 6.08%
- Direct Graduate PLUS Fixed Interest Rate is 7.08%
Federal DIRECT LOAN ORIGINATION FEES (for loans first disbursed on or after October 1, 2019 and before October 1, 2020)
- Direct Unsubsidized Loan Origination Fee on or after October 1, 2019 is 1.059%
- Direct Graduate PLUS Loan Origination Fee on or after October 1, 2019 is 4.236%
Alert: Borrowers on an IDR Plan Who Haven't Submitted Their Annual Renewal Documentation!
Borrowers on IDR plans that do not recertify their income and family size on time forces them into the Permanent Standard plan, which could result in a much higher monthly payment.
2018-2019 Direct Loan Origination Fees (October 1, 2018)
2018-2019 Direct Loan Interest Rates (July 1, 2018)
2017-2018 Direct Loan Interest Rates (July 1, 2017)
2017-2018 Direct Loan Orignation Fees (October 1, 2017)
Prior-Prior Year (PPY) FAFSA begining with AY2017-2018
2016-17 Direct Loan Interest Rates (July 1, 2016)
PLUS Loan Entrance Counseling Requirement effective March 29, 2015
2015-16 Direct Loan Interest Rates (July 1, 2015)
Further Impact of Sequestration on Student Loans (Nov. 2013)
Impact of the Government Shutdown on Federal Student Aid Systems (Oct. 2013)
Impact of Sequestration on Student Loans
2018-2019 Direct Loan Origination Fees for loans disbursed on or after October 1, 2018
Because the Budget Control Act of 2011 (the sequester law) remains in effect, Direct Loan fees will change for all Direct Loans disbusred on or after October 1, 2018. (Loan fee calculations that result in more than two decimal places must be truncated, not rounded to two digits after the decimal point (cents).
Direct Unsubsidized Loan Origination Fee on or after October 1, 2018 is 1.062%.
Direct PLUS Loan Origination Fee on or after October 1, 2018 is 4.248%.
2018-2019 federal DIRECT LOAN INTEREST RATES for Graduate and Professional Students (as of July 1, 2018)
The interest rate is determined annually for all loans first disbursed during any 12-month period beginning on July 1 and ending on June 30, and is equal to the high yield of the 10-year Treasury note auctioned at the final auction, plus a statutory add-on percentage that varies depending on the loan type.
- Direct Unsubsidized Loan: 6.60% (fixed interest rate)
- Direct Graduate PLUS Loan: 7.60% (fixed interest rate)
On May 10, 2017, the U.S. Treasury' 10-year Treasury note auction resulted in an increase in interest rates for federal student loans disbursed on or after July 1, 2017. The interest rates will be fixed for the life for the loan.
- Direct Graduate PLUS Loan: 7.00%
The origination fees for loans disbursed on or after October 1, 2017 are as follows:
- Direct Graduate PLUS Loan: 4.264%
PRIOR-PRIOR YEAR FAFSA
In Fall 2015 the President announced two major changes to the Free Application for Federal Student Aid (FAFSA) process. While traditionally the FAFSA filing cycle begins on January 1 of the year preceding the award/academic year (e.g., January 1, 2016, for the 2016-2017 award/academic year), beginning with the 2017–2018 FAFSA cycle, the application will become available to students three months earlier on October 1 (e.g., October 1, 2016, for the 2017-2018 award/academic year.
The second change announced by the President is that, again beginning with the 2017-2018 cycle, the FAFSA will collect income information from the tax/calendar year one year earlier than has been used in the past. Thus for the 2017-2018 FAFSA, students will provide income information from calendar year 2015 and not from calendar year 2016. Because of this, almost all tax return filers will be able to electronically transfer their tax information directly into their FAFSA by using the IRS Data Retrieval Tool (DRT).
PLUS Loan Entrance Counseling Requirement effective March 29, 2015
All graduate/processional PLUS loan borrowers who have a determination of adverse credit history from the Department of Education, but who are later successful in teh appeal of this determination, will be required to undergo special loan counseling prior to receiving their PLUS loans. This applies to all successfull graduate/professional students regardless of the method of the appeal. Those who were reconsidered based on extenuating circumstances or who obtained an endorser for the loan must complete the special counseling. This special counseling is separate from entrance counseling required of all borrowers. The Department of Education provides this additional counseling through www.studentloans.gov. We cannot disburse loan proceeds to a student subject to this new requirement until we have received confirmation of its completion.
2016-2017 Direct Loan Interest Rates
Federal student loan interest rates are reviewed by Congress each year and the results are tied to financial markets. The interest rates are effective each year for loans that have a first disbursement on or after July 1, 2016 through June 30, 2017. Knowing what your interest rates will be on the loans that you will borrow can dramatically help you in planning for your future. To ensure financial success you should know not only know how much your education costs NOW, but also how much you will OWE once you graduate.
- Direct Unsubsidized Loan: 5.31%
- Direct Graduate PLUS Loan: 6.31%
2015-2016 Direct Loan Interest Rates
Under section 455(b)(7) of the Higher Education Act (HEA), interest rates on Federal Direct Loans are set according to a formula that is based upon an auction of 10-year Treasury Notes. Separate interest rates are established each year for Direct Subsidized Loan, Direct Unsubsidized Loan, and Direct PLUS Loans for which the first disbursement is made on or after July 1 through the following June 30.
On Wednesday, May 13, 2015, the Treasury Department held a 10-year Treasury Note auction that resulted in a high yeld of 2.237%. Below displays the resultant interest rates for Direct Unsubsidized Loans and Direct PLUS Loans first disbursed on or after July 1, 2015 and before July 1, 2016.
- Direct Unsubsidized Loan: 5.84%
- Direct Graduate PLUS Loan: 6.84%
2015-2016 Direct Loan Fees
Because the Budget Control Act of 2011 (the sequester law) remains in effect, sequester-required changes for Federal fiscal year 2016 (FY 2016) will be required effective October 1, 2015. The terms of the sequester decrease the loan fees charged to Direct Loan borrowers for Direct Unsubsidized and Direct PLUS loans. For loans where the first disbursement is made on or after October 1, 2015 and before October 1, 2016
- The loan fee for a Direct Unsubsidized Loan is 1.068%. For example, the fee on a $20,500 loan will be $218.94.
- The loan fee for a Direct PLUS loan is 4.272%. For example, the fee on a $10,000 PLUS loan will be $427.20.
2014-15 Direct Loan Interest Rates
Last year, President Obama signed the Bipartisan Student Loan Certainty Act of 2013, which amended section 455(b) of the Higher Education Act (HEA) to provide new formulas for the determination of interest rates for all Federal Direct Loan types. Interest rates are established each year for Direct Unsubsidized and Direct PLUS Loans for which the first disbursement is on or after July 1 through the following June 30. The rate is the sum of a uniform "index rate" plus an "add-on" that varies depending the type of the loan and whether the borrower is an undergraduate or a graduate/professional student. Under the law, the index rate is determined each year as the "high yield of the 10-year Treasury note." The interest rate for a loan, once established, applies for the life of the loan - that is, the loan is a fixed-rate loan.
On Tuesday, May 7, 2014, the Treasury Department held a 10-year Treasury not auction that resulted in a high yield of 2.612%. Below displays the resultant interest rates for Direct Unsubsidized and Direct PLUS Loans first disbursed on or after July 1, 2014 and before July 1, 2015.
Direct Unsubsidized Loan: 6.21%
Direct Graduate Plus Loan: 7.21%
2013-14 Direct Loan Interest Rates
President Obama signed into law the Bipartisan Student Loan Certainty Act of 2013. The new law amends the Direct Loan interest rate section of the Higher Education Act of 1965, as amended (the HEA). Specifically, the new law amends section 455(b) of the HEA to provide new formulas for the determination of interest rates for all Direct Loan types for which the first disbursement is made on or after July 1, 2013. The new interest rate determination also applies to Direct Consolidation Loans for which the consolidation loan application was received by the Department on or after July 1, 2013.
Under this law, interest rates will be established each year for Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans for which the first disbursement is on or after July 1 through the following June 30. For the 2013-14 year, the fixed rates for graduate/professional students are as follows:
Direct Unsubsidized Loan: 5.41%
Direct Graduate Plus Loan: 6.41%
For more detailed interest rate information, visit http://studentaid.ed.gov/About/announcements/interest-rate.
Sequestration and New 2013-14 Direct Loan Fees
On August 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as a “sequester,” to take effect if Congress failed to enact legislation to reduce the Federal deficit by March 1, 2013. Because Congress did not act, these budget cuts are now in effect. Below is a summary of the impact of these budget cuts on federal student aid programs for graduate students:
- For a Direct Unsubsidized Loan, the loan (or origination) fee will increase from 1.0 percent of the principal amount of a loan to 1.051 percent. For example, the fee on a loan for $20,500 will be increased by $10.46 from $205.00 to $215.46.
- For a Direct Graduate PLUS Loan, the loan fee will increase from 4.0 percent to 4.204 percent. For example, the fee on a $3,000 Direct Graduate PLUS Loan will increase by $6.12 from $120 to $126.12.
For more information about the impact of sequestration on federal student aid programs, see https://studentloans.gov/myDirectLoan/images/SequestrationImpact.pdf.
Impact of the Government Shutdown on Federal Student Aid Systems (Oct. 2013)
While Department of Education offices are closed during the partial government shutdown, the majority of Title IV (Federal Student Aid) processors, contact centers, and Web sites remain operational. Students may continue to complete FAFSA applications, promissory notes, and entrance counseling and may continue to request and receive federal student aid. Additionally, all federal student loan servicing will remain operational and the Department will continue processing consolidation applications via the Direct Consolidation Loans website. Questions related to federal student aid processing during the government shutdown may be directed to the Consortial Financial Aid Office at email@example.com.
Further Impact of Sequestration on Student Loans
Under the Budget Control Act of 2011, additional sequester funding reductions took effect with the start of the 2014 Federal fiscal year (FY 2014). The information here applies to FY 2014 only:
As of October 1, 2013, the sequester increases the origination fees charged to Direct Loan borrowers beyond last year's increases. The new loan fee percentages will apply only with regard to loans where the first disbursement is made on or after December 1, 2013. The new loan fees are 1.072 percent for Direct Subsidized Loans and Direct Unsubsidized Loans and 4.288 percent for Direct PLUS Loans (both parent and graduate student PLUS Loans). The loan fees on Direct Loans where the first disbursement was or will be made on or after July 1, 2013 and prior to December 1, 2013 continue to be those noted below (see 'Sequestration and New 2013-14 Direct Loan Fees, below) - 1.051 percent for Direct Subsidized and Direct Unsubsidized Loans and 4.204 percent for Direct PLUS Loans, regardless of when any second or subsequent disbursements are made.
The increased loan fee percentages must be applied to any loan disbursement for a loan where the first disbursement will be made on or after December 1, 2013. This includes loans that will be made for the remainder of the 2013-2014 academic year and loans that will be made for summer 2014. At this time, we have no information about the amount of the loan fees for Direct Loans that will be first disbursed on or after October 1, 2014.