Money for College

Pell Grants or free college money do not appear in the news recently? The Government has provided changes into higher education programs, which may have some influence on you too…

Positive Changes in Pell Grant Program

The Pell Grant program provides $2.6 billion for students. The total grant rockets, though they can also stop growing any time.

Negative Changes in Other Financial Support Programs

To tell you the truth, the term “changes” doesn’t quite display its meaning. Statistics shows 47 programs coming to an end. Due to it government can save the money for the Pell Grant program. Take into consideration that 47 of these other programs is $3.3 billion each year. That’s a lot of money. We understand that many grants aren’t loan programs, but still.

Student Loan Subsidies Cut

Congress also has cut the subsidy rate for federally guaranteed loans. The government pays lenders who loan according to their program. This subsidy keeps the program working, and keeps the lenders loaning to students that need the funds. When the rate drops, lenders have to reevaluate their budget. By dropping the subsidy rate, smaller lenders get squeezed out of the market. And that limits the choice.

Sallie Mae, the main student lender, has tightened their lending standards based on the subsidy change. By changing their lending strategy, you will probably see fewer students receiving student loans through the lenders that stay in the federal programs like Stafford and Perkins.

Your Financial Aid

Do these changes affect you? It depends, whether you will apply for a grant this year or not. If you want to apply for a Perkins Loan or another kind of loan, get ready to have challenges. The subsidy on these loans is lowered, and as a result the banks lose their income, so they give out less money, or simply give it to not so many students.