Changes to college loans and financial aid
Changes in income-based repaymentLast year the feds rolled out a new income-based repayment plan that allows borrowers to keep their federal loan payments capped at 15 percent of their discretionary income, defined as any income over 150 percent of the poverty line. This year, they're improving the plan.
According to the Project on Student Debt, a nonprofit research and policy organization based in Oakland, Calif., the government has implemented two major fixes -- one which calculates income-based repayments for married borrowers who both have federal student loans by weighing the total student loan debt for the household against total household income.
Prior to July, the system did not take into account total household student debt, forcing married borrowers to pay up to twice the amount that two equivalent single people would pay. Married borrowers in the income-based repayment plan should contact their lender to update their payment plans.
The second change gives a break to borrowers eyeing income-based repayment. Instead of calculating eligibility based on the original balance of the loan when the borrower entered repayment, the government will now look at either the original balance or the current loan amount, whichever is greater. The new rule allows more borrowers who have loans with accrued interest to enter income-based repayment.
Pell grants go up"Students should also be aware that there's more money in the Pell grant (program) this year than last," says Buchanan. "The award is also available year-round now instead of just in fall."
In addition to the Pell grant amount rising from $5,350 to $5,550 this year, more students will qualify. Students from households with expected family contribution levels of 95 percent of the grant amount or less are eligible to receive the award, according to the Department of Education.
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