Student loans, other aid to change for next year

Thanks to dramatic federal changes in financial aid, GCSU will implement a new tuition repayment plan.

“Say a student is getting financial aid, but their balance is $1,000. This would allow them to budget it out,” said Suzanne Pittman, director of Financial Aid. “They would need to start making payments before the semester and maybe make a payment in June, July, August, September and October. Students will apply over the Internet. There is no interest associated with it, but there is a $50 fee to enroll. There are no credit checks or anything like that.”

The new plan is, in part, a reaction to a new act of congress.

“(The Higher Education Reconciliation Act of 2005) made some pretty major cuts in student aid and so there are some things that students need to know about,” said Pittman.

Starting July 1, Stafford Loans will have a fixed interest rate of 6.8 percent, Pittman said. Previously, the loans had a variable interest rate, which often fell below the new rate.

The amount of money a student can borrow will also change in the years to come. Beginning in the 2007-2008 school year, freshmen limits for Stafford Loans will increase from $2,625 to $3,500, while sophomores’ limits will improve from $3500 to $4500. Juniors and seniors will stay at $5,500.

“I think that the department of education and congress think that $5,500 is enough,” Pittman said. “I think that the concern is doing something that may create to much debt for students.”

“But something that we are seeing is an increase in private loans, so a student might be getting $5,500 from a Stafford Loan and then apply for a private educational loan as well. Those students would be in a better position if the loan limits were higher so they could do everything from the federal program.”

Daniel Seibel, a sophomore political science major, does not see a problem with loan debt.

“I love student loans,” Seibel said. “When you go under a couple thousand, it lets you stay in school. Then, when you graduate and make millions, it won’t matter.”

The new act also calls for four percent of a student’s loan to be withheld for origination fees, insurance and default aversion fees, Pittman said. GCSU students should not be affected though, thanks to the school’s lender.

“Our lender, SunTrust has agreed to cover all those fees starting next year,” Pittman said. “So in a loan for $2,000, the student will receive the full $2,000. So that is a good thing in that it will put a little bit more in the student’s pocket.”

Posted by Colonnade Archives on Apr 21 2006. Filed under News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry