On December 23, 2011, President Obama signed into law the Consolidated Appropriations Act, 2012 (Public Law 112-74).1
The new law significantly impacts the Federal student aid programs. Here is some information on the changes made to the Title IV student aid programs and the effective date of those changes.
2012-2013 Pell Grant Amounts
The Consolidated Appropriations Act, 2012 (Public Law 112-74) established the maximum Federal Pell Grant award for the 2012-2013 Award Year at $4,860, the same maximum award that was established by the 2011-2012 appropriations act.
However, section 401(b)(7)(B) of the Higher Education Act of 1965, as amended (the HEA) provides for an automatic increase to the appropriated Federal Pell Grant maximum award of $690, resulting in a 2012-2013 maximum award of $5,550.
Auto-Zero EFC Income Threshold
Reduces the income threshold for an automatic zero expected family contribution (EFC) from $30,000 to $23,000 for the 2012-2013 award year for both dependent and independent students.
Minimum Pell Grant Award and Maximum EFC
The minimum Pell Grant award for a student is now set at ten percent of the maximum award amount for the award year. Beginning with the 2012-2013 award year, students will not receive a Federal Pell grant if they are not eligible for at least ten percent of the maximum award for the academic year.
The change in the calculation of the minimum award amount results in $4995 being the maximum EFC enabling a student to be eligible to receive a 2012-2013 Pell Grant.
Pell Grant Duration of Eligibility
A student’s eligibility to receive a Pell Grant has been reduced from 18 semesters or its equivalent to 12 semesters or its equivalent. This provision applies to all Pell Grant eligible students and includes all years of receipt of Pell Grant funding. It is not limited to only students who received their first Pell Grant on or after the 2008-2009 award year, as the previously HEA provided when it established 18 semesters as the duration of eligibility limit.
The Department will calculate the equivalency by adding together each of the annual percentages of a student’s scheduled award that was actually disbursed to the student.
For example, a student whose 2011-2012 Pell Grant scheduled award was $5,550 but who only received $2,775 because she was only enrolled for one semester will have used 50% of that award year¹s scheduled award. Similarly, a student who was enrolled three-quarter time for the entire award year would have used 75% of his scheduled award.
Federal student aid will not be available for students without a certificate of graduation from a school providing secondary education or the recognized equivalent of such a certificate.
There are exceptions for some home-schooled students. Students must have a high school diploma or a recognized equivalent (e.g., GED), to be eligible to be eligible to receive Title IV student aid. The ability to benefit (ATB) alternatives (such as ATB test or completing 6 credit hours or 225 clock hours) will be eliminated for students who have not been enrolled prior to July 1, 2012.
There are some exceptions for students with intellectual disabilities who are enrolled in approved Comprehensive Transition and Postsecondary Programs.
For an institution to qualify as an eligible institution, it may admit only students with a high school diploma or the recognized equivalent of a high school diploma or students who are home-schooled or who are beyond the age of compulsory attendance.
Grace Period Interest Subsidy
The interest subsidy provided on Direct Subsidized Loans during the six month grace period provided to students when they are no longer enrolled on at least a half-time basis is temporarily eliminated. This change will be effective for new Direct Stafford Loans for which the first disbursement is made on or after July 1, 2012 and before July 1, 2014.