Yesterday, a bill that was signed into law will help emerging students pay for the cost of their education. There are several facets to the new law, so here’s a summary of the major talking points.
The maximum Pell Grant, which is awarded to students based on financial need, will increase from $4,310 to $5,400 per year over the next five years, starting with $4,800 next year.
20 years ago, a Pell Grant would cover 60% of the average public university tuition cost.
The interest rate for subsidized Stafford loans is dropping to 3.4% over the next four years. If you qualify for a subsidized Stafford loan, the government pays the loan’s interest for you while you are in school. The new law has no effect on unsubsidized Stafford loans.
Struggling graduates can benefit from a new formula to determine their repayment schedule. If you qualify, your lower payments will be based on 15% of your annual discretionary income. This applies to private loans as well, not just government loans.
If you plan on teaching and commit to the profession for at least four years, you can qualify for an additional $4,000 a year in grant money. These grants will revert to loans for anyone who gives up on the education industry.