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Financial aid changing for the better

Published: Thursday, July 2, 2009

Updated: Monday, August 3, 2009 17:08

Some welcome news is coming in these rough economic times for students receiving financial aid.

Jodie Kuba, UH Mānoa director of financial aid services, said about half of UH Mānoa's 20,000 students are awarded some form of financial aid.

"We encourage (students) to apply for scholarships and everything else and to try and minimize the cost of tuition, which is always going up and never going down," Kuba said.

A number of changes being made to college financial aid programs will go into effect today. In addition to the changes, President Barack Obama is attempting to condense the Free Application for Federal Student Aid (FAFSA) to make it easier on students seeking aid.

The amount and type of aid students receive is based on their responses to the FAFSA form, which gauges the students' estimated family contribution, cost of attendance and their living status (living at home, off-campus or in dorms).

Starting today there will be a slightly lower interest rate on subsidized undergraduate student loans, an increase in the minimum and maximum amount of Pell Grants that can be awarded to a student and a new year-round Pell Grant.

The maximum Pell Grant, or the money eligible students receive that they don't have to pay back, is increasing more than $600, to $5,350, and the minimum Pell Grant for part-time students will also see an increase of $486.

Under the College Cost Reduction and Access Act, the federal government automatically chips in $490 in Pell Grant funds to eligible full-time students, thus the least amount of Pell Grant award eligible full-time students can receive is also increasing to $976.

A new year-round Pell Grant was also established and will go into effect today. Kuba said that in the past, if students had a full-time Pell Grant for the fall and spring semesters, there wouldn't be any money left over to pay for summer classes. With the new year-round Pell Grant, eligible students would also be able to receive a full-time Pell Grant for the summer.

Kuba said an 18-semester cap has also been placed on the amount of time a student can receive Pell Grants, with the reasoning behind the change to the grants being to encourage students to graduate faster.

Subsidized student loans are loans that students will have to pay back, but the Feds will pay the interest rates while students are still in school at least part-time. This interest rate will drop .4 percent to 5.6 percent, and will continue to gradually decline to 3.4 percent in 2011.

Unsubsidized student loans, or loans the students have to pay the interest rates for while they are in school, will remain stable at 6.8 percent.

"We always recommend the students to try to pay the interest on the unsubsidized loan while they're still in school," Kuba said. She stated that if students don't pay the loans, the interest is capitalized, or added into the total amount of the loan.

"The interest is accumulating because the loan is getting bigger and bigger," Kuba said.

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