Although the absurdity of the debt ceiling debate may have made you think that politics are completely out of touch with reality, the Budget Control Act has some very real and important implications for Columbia students receiving financial aid.
First the good news: Pell Grants will continue to be funded through 2013, without a reduction in the maximum allowance of $5,550. As we explained when the bill was passed last year, healthcare reform actually included some very important changes to federal student loans. Columbia prides itself on educating the most Pell recipients of any Ivy League or private research university.
And the bad: the money to keep the Pell Grants alive comes from the elimination of federal subsidies for grad students. Furthermore, for all students with federal loans, benefits for timely payments will most likely be cut, and interest rates see increases, starting July 1, 2012.
The Office of Financial Aid’s e-mail explains the changes in detail after the jump.
On Tuesday, August 2, President Obama signed into law the Budget Control Act of 2011, which will have a direct impact on financial aid at Columbia and higher education institutions nationwide. While undergraduate Pell Grants are continued through 2013, the new law includes the elimination of subsidized federal loans for graduate students, as well as the elimination of incentives for repaying loans on time for all students. We are writing to explain how these changes will affect your future loan awards and repayment arrangements.
Please know these changes will not affect earlier Direct Loans, or those taken out for Fall 2011 or Spring 2012, but are effective for loans disbursed on or after July 1, 2012.
For all Students with Loans: The new law eliminates some discounts given to Direct Loan borrowers who make their payments on time. These changes will be effective for loans disbursed beginning July 1, 2012, and will not affect previous Direct Loans. The current repayment incentives that will be changed or eliminated next July are:
- The up-front interest rebate at Direct Loan disbursement, equal to 0.5% of the loan amount and applied toward the 1% loan origination fee charged by the Department of Education. Borrowers who make 12 on-time payments keep the up-front rebate.
- For PLUS loans, the up-front interest rebate is currently 1.5% applied toward the 4% origination fee.
- The current incentive for using automatic debit repayment plans for Direct Loans is a 0.25% interest rate reduction. Note that under the provisions of the new law, there may be some continuation of an interest rate reduction for automatic debit payment arrangements for loans originating July 1, 2012 or later, but this change has not been finalized.
As a reminder, Columbia’s summer terms span multiple sessions, some of which begin before July 1. Students who expect to take out loans for a Summer 2012 session that begins prior to July 1 should be sure to have all application materials handed in on time to receive the pre-July 1 benefits.
For Undergraduate Students: The maximum amount for Pell Grants will remain $5,550. The new law provides funding for Pell Grants through 2013.
For Graduate Students: Beginning in July 2012, the U.S. government will no longer subsidize federal loans to graduate students. The new federal law eliminates the subsidy and uses the savings to fund Pell grants for low-income undergraduate students. We encourage borrowers who will be taking out additional unsubsidized loans after July 1, 2012 to consider making optional interest payments while in school to reduce overall debt before graduation.
If you have any questions about changes to your financial aid, please reach out to your school’s financial aid office. As a reminder, contact information for school offices is online:
University Financial Aid
@Anonymous Not too mention I saw a Columbia grad student on bravo channels
Matchmaker episode today, what a money grubbing biatch
@Anonymous I think the best part about all of this is the fact that the financial aid director’s name is Mercy Goodnow-Smith.
@Stanley Cavell HOW WILL FUTURE TAs AFFORD SCARVES?!
@Anonymous This comment thread reads like there are a few conservative trolls. Maybe Glenn Beck linked to the story?
@Yakov markovnikov In natural sciences, grad school pay you!
@Anonymous This potentially has the power to destroy the Higher Ed ponzi scheme. Because this will decrease the number of student who can foolishly borrow themselves into insolvency. In addition it will hamper the ability of universities to raise fees and tuition, by artificially decreasing borrowing rates they enabled students to borrow more, and universities have always obliged themselves by raising tuition in concert thereafter. Moreover, private banks now will not make up the difference as they are stingier with lending in general (and no longer receive subsides to originate loans), s0 that valve is shut (unless you want to become a medical professional as banks lend to these majors sometimes even at a discounted rate ).
@Anonymous Or, higher education will once again become solely the realm of the upper and upper middle classes.
@Anonymous yes, useless degrees with no economic value will become a domain upper and upper middle classes. As they still are. If you get a phd program it is your generally funded. Med, law and business school and masters in education, nursing, cs, math, physics engineering and others one could probably find a private lender. If you want to drink, hangout and meet people (i.e. getting a masters in the study of albino turtle gender theory or anything of that ilk) its a luxury, i personally prefer cruises, go to a bar its cheaper. I am currently working and paying for a masters degree. Over the long run this will probably decrease the rate of tution increases
@Anonymous Perhaps you’ve not tried to get a job in this economy; in case you haven’t, you definitely need a master’s degree to get anywhere now. So while you may not want to pay to go to grad school, these days you pretty much have to if you want to actually support yourself. Also, believe it or not, some of us go to school to learn rather than get drunk and party.
But I’m not sure I even got much of the point of this comment, since you are either drunk or practically illiterate.
@Anonymous Wasn’t it such a great idea to try lowering the deficit in the middle of a recession?
Here’s how this story goes: Government cuts all subsidized loans for graduate school. Recent grads with bachelor’s degrees can’t find jobs without at least a master’s because economy is so terrible. Recent grads can’t pay to get said master’s degree without taking out private loans. Recent grads take out private loans, graduate with master’s degrees, and still can’t find work.
Basically, we’re all screwed.
@... And who knows, now it might even be more difficult to get loans since the credit downgrade that the budget cutting was supposed to avert happened anyway. So now we potentially have all of the deleterious effects of a downgrade on credit markets, public perception, and global confidence, AND we have the very real deleterious consequences of failing to invest in the country’s future at the appropriate levels, notwithstanding all of the pretense to the contrary by our very progressive president.
@Anonymous you sound smart.
@Anonymous you had me at “deleterious”
@LOL KEEP IT SIMPLE STUPID you could’ve just said: Due to the credit downgrade, it will be harder for students to get advanced degree loans and thus, the future of America is in jeopardy since its students wouldn’t be educated enough, DESPITE Obama’s progressive stance that “education should be available to people of all classes”.
@this sucks! I love it how the gvt is fucking over middle class and lower class students who now have less chances of going to grad school. Thanks alot!
@Anonymous Availability of Pell grants is good news only for the universities and the Federal government. More Federal ‘benefits’ for some means higher educational prices for all. Open your eyes and your mind.
@that's nice. ” Columbia prides itself on educating the most Pell recipients of any Ivy League or private research university.”
awesome!! thanks bollinger!!! pell grants are maximum ~$5500. thanks!!!!!! that’s A LOT OF FUNDING.
….as opposed to HARVARD which doesn’t give out as much pell grants but provides $150,000 to each underprivileged student to attend harvard for free right? rriiight?!
so proud of you columbia!!!
im gonna print out ” Columbia prides itself on educating the most Pell recipients of any Ivy League or private research university.” and glue it to my bumper.
@Anonymous The point of pride comes from the socioeconomic diversity that figure implies, not the dollar amount associated with the grants themselves. Also, I feel obligated to point out that Harvard’s endowment (and probably alumni contributions) is substantially larger than Columbia’s.
@What? Harvard lets students who make under $60,000/year attend for free. So does Columbia. If you make $150,000/year, you won’t get free tuition at either school. Harvard’s financial aid is more generous than Columbia’s for the upper-middle-class (someone making $150,000 might pay $30,000 at Harvard vs. $50,000 at Columbia) because they have a much larger endowment, but both schools give aid to those who really need it.
Of course, overall Harvard’s students need less aid than Columbia, because they’re (on average) richer than Columbia students. The fact Columbia educates the largest number of Pell grant recipients in the Ivy League is significant because it means not all our students are rich.
@you, sir or madam, are an idiot. Pell Grant recipients pay $0 to go to Columbia. As everyone else has pointed out, the fact that we have the most recipients actually shows that we give a free education to MORE people in the lowest income bracket.
You’re an underclassman, aren’t you? Think before you talk/type. It will help in life.
@... false. the largest population of pell grant recipients at columbia is in gs, where most graduates finish with a scarlet letter for a diploma and more debt than you can even fathom.
@Anonymous is there a page on the statistics for this? just curious.
@Anon “Pell Grant recipients pay $0 to go to Columbia.”
Where the fuck did you get that from? And then you have the gall to call someone else an idiot? Ha! Take your own advice and think before YOU talk/type. Or better yet, ask someone who can think for themselves — someone who won’t resort to to the misguided opinion of others before making a judgment call on who is and is not an idiot.
And stop with the you’re-an-underclassmen-bullshit. It gets old after a while — especially when the person talking is clearly suffering from a horrible case of illusory superiority.
@Well... In order to be eligible for a Pell Grant, you have to have a family contribution of under $5500. If you’re a student in CC or SEAS and you have a family contribution of under $60,000, you will pay nothing for Columbia. Ergo, every Pell Grant recipient in CC or SEAS pays nothing to attend Columbia. Students at GS—who are technically undergrads—probably pay significantly more to attend Columbia, since GS has terrible financial aid. But anyone in CC or SEAS on a Pell Grant is going to Columbia for free.
@Anon Are you a Pell Grant recipient? Because I am. And no, I do not pay $0 to go here.
@Anonymous I was a Pell Grant recipient ever year and this is not true. Yes my Parent’s Contribution was often less than $5500 but Columbia made me pay $3000+ of Student Contribution which they magically expected me to earn every summer. I was also expected to earn a equivalent amount through work study every semester (again, pretty difficult). But to answer your question, no Pell Grant recipients do NOT pay $0 to attend columbia.
@Anonymous That’s putting it lightly. $6.7 billion endowment, no EFC, and I still get to take out $75k in private loans to graduate from GS.
@HEY COLUMBIA HIPPIES now do you regret voting for obama you fools?
i voted for him. now you bet i regret it.
this is the future of america we’re talking about here.
@I'm sure others will note, and not entirely unfairly, that Obama was merely one player in a difficult political entanglement– one in which the opposition did nothing but clamor for cuts that were even deeper. Yet I think nobody can objectively deny that he was an exceptionally poor bargainer, that he was an exceptionally weak advocate for any particular view (with the exception of a smattering of occasions), and that in the end he lost despite holding EVERY conceivable strategic advantage– not least of which the complete ideological inconsistency and fundamental shamelessness of his opponents’ position. For full disclosure, I didn’t even vote for him, and even I am disappointed. (Of course I’m disappointed in his opponents as well, but at least their shortcomings on such matters were always basically evident).
@Anonymous Real hippies voted 3rd party, stop giving us a bad name. Obama didn’t promise any difference than Bush besides “hope,” “change” and black man.
@You are politically retarded.
@Are you daft? The GOP wanted to cut Pell grants.
If McCain was president, there would be no loans for grad students or undergrad students. Obama fought to protect Pell grants…how can you blame him for this?
@What noise does a constipated financial aid officer make?
@Anonymous i mean, what were u gonna do with that PhD in anthropology anyway?
@Exactly! Much less useful than, say, a Bachelor of Arts in Anthropology. Who needs grad school?
@Exactly! I hope the satire is self-evident.