The new year is only a couple of months old but there are already reasons for staff and faculty to pay attention to potential changes in financial aid. With the fiscal cliff, sequester, and uncertainty in Washington, federal aid to students is an ever-changing landscape.
Part of a deal passed January 1 to avert the so-called fiscal cliff, education tax benefits previously set to expire were extended for five years. Through 2017, families or students can claim the American Opportunity Tax Credit (AOTC) to receive a credit of up to $2,500 for college expenses, including tuition and textbooks. (Find out about renting textbooks.)
Other changes include the revival of the Tuition and Fees Deduction, which had expired in 2011 but can now be claimed through 2013. Students, spouses, or parents can deduct up to $4,000 on their income tax returns for qualifying education expenses paid, including any school-mandated fees necessary to enroll or attend.
The future of other federal education funding for 2013 is still up for debate, as cuts to popular financial aid programs such as federal work-study have happened due to automatic cuts known as sequestration.
The National Association of Financial Aid Administrators has provided a state-by-state analysis of what happened when sequestration went into effect in its current form. Portland State University’s Office of Scholarships and Student Financial Aid don’t expect to see any significant cuts to financial aid awards due in part to the minimal amount we receive.
The fate of subsidized student loan interest rates also rests with Washington politicians, who last year put a temporary freeze on a pending doubling of interest rates for certain undergraduate loans. Instead of rising from 3.4 percent to 6.8 percent last July 1, the interest rate on subsidized Stafford loans was kept at 3.4 percent through June 30, 2013. If Congress doesn't take action beforehand, the rates will automatically double on July 1 of this year for new loans.
The potential interest rate uptick may not be immediately recognizable to many students. Usually, the effects of changes in interest rates aren’t felt by students until after they graduate and are in repayment on their student loans.
For more information on loan repayment and the process for students, find out at how to start paying off student loans.
To stay up to date on the most recent changes to student financial aid, such as student loan interest rates, stay in contact with PSU’s Office of Financial Aid & Scholarships. We want you to be up to date on the exciting and always changing financial aid landscape.