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What the New Government Spending Bill Mean for Student Loans

November 26,2014 by: admin

“Cromnibus”, the popular name for the continuing resolution omnibus spending bill, is most likely to pass by the deadline this year. Many analysts believe that this bill will bring the student loans back to previous level of last year. However, there are a few things that most students may not be aware of as yet. Availing

Ability to Benefit Provision Returns

This is one of the most prominent changes that the passing of this bill will bring about for student loan procedures. This bill limits the ability to benefit provision to candidates enrolled in a career pathway in community colleges. Previously, students lacking a GED or high school diploma were able to qualify for federal financial aid. All they had to do was clear the “ability to benefit” test or successfully complete at least six credits in a degree, diploma or certificate program.

What Is Missing In Cromnibus

Cromnibus actually leaves out a few significant parts as compared to the previous bill. Student grants like Pell Grants and similar would become victim to cuts. The Subsidized Stafford loans are seeing cuts for the past several years and now, the eligibility has become strictly limited to students at the undergraduate level and that too, within a restricted time frame.

Generally, there is not such a drastic level of change in the funding of pre established programs. The Pell Grant advocates had actually forecasted that they would be facing a surplus of $2 billion of the current $4 billion used to fund other programs, when in reality; the change was only about $300 million.
Even the President’s First in the World program will have to face cuts ranging from $70 million to $60 million. This amount has been aimed for use in other student aid programs.

However, some programs will actually see an increase in the funds. The TRIO is analyzed to grow by about $1.5 million where on the other hand, the federal work study program is estimated to see an increase of $15 million. Though the rates of increase for the Pell Grants are significantly lower, the maximum award for the following year will increase by $5,730 to $5,830.

A positive change will be seen for the veterans and disabled students with the passing of this bill, as about $5 million have been set apart for programs for veterans and about $2.5 million have been set apart for students with disabilities.

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