By now you’ve probably heard all about the fiscal cliff and what it could mean for America. If the spending cuts do take place there is one set of people it could hit hard: college students. Some of the cuts could mean less financial aid for many current and soon-to-be college students.
According to a 2012 College Board report, federal grants totaled $49 billion during the last academic year which was actually 5% less than the previous academic year. Federal work-study programs also fell to $972 million, the first time it has fallen below a billion in about a decade. Although the fiscal cliff still hangs in the balance, some experts believe that parents and students need to start preparing for the possibility of the following financial aid changes.
- Scaled back Pell Grants. The entire Pell Grant program could be scaled back cutting down how many semesters students may receive the grant for. Eligibility might also become more limited as families will have to make less than $23,000 for their student to qualify for the aid.
- Raised interest rates. If the changes follow through, federal subsidized Stafford loan interest rates could double to 6.8%. Another proposal on the table asks for changes to be made on how federal loan rates are determined. Future rates could be determined by prevailing interest rates, they would be fixed but each year it would be a different fixed rate rather than one steady rate. It could save some students money but it could cost others more as well.
- College tax expiration. Tax credits are great for both parents and students, but the Provisions for the American Opportunity Tax Credit is set to expire this year. If it proceeds and is not challenged then the tax cut will be down to $1,900 from $2,500 for up to two years.
All of these changes are still “yet to come” and no one can predict how the fiscal cliff will be handled. However, when it comes to college savings it is always best to prepare for the worst whether it is changes from the government or changes from the school itself. If you find yourself in a bind, a personal loan may be a good way to offset some of the many college expenses. AmOne can help you get connected with the right lender for you. Contact AmOne today to learn more about personal loans.