University of Vermont

Student Financial Services

Financial Aid News

This page was created to help our students and their families stay informed about changes to federal aid programs. The links at the right will direct you to additional resources for more detailed information. This page is updated as frequently as necessary based on federal updates.

Scroll down or click a link below to go directly to an area of interest.

Elimination of Subsidized Stafford Loans for graduate and professional students as of July 1, 2012.

Affected: Graduate and Professional Students Borrowing Direct Stafford Loans

Effective for loans made for periods of enrollment (loan periods) beginning on or after July 1, 2012, graduate and professional students are no longer eligible to receive Federal Direct Subsidized Stafford Loans. Direct Subsidized Stafford Loans received for loan periods beginning before July 1, 2012 are not affected by this change.

Undergraduate students may still receive Federal Direct Subsidized Stafford Loans, if otherwise eligible.

Further changes to aid programs are possible for 2012-13 and beyond.

Affected: All financial aid recipients.

On August 2, Congress passed the Budget Control Act of 2011, which reduces our nation’s deficit, while simultaneously raising the debt ceiling and creating a congressional bipartisan Super Committee to find further cuts this fall. The Budget Control Act of 2011 provided funding to reduce a shortfall in the Pell Grant program and maintain Pell Grant award levels for the 2011-12 school year.

However, the Pell Grant program continues to face a $1.3 billion shortfall for 2012-13 school year and additional cuts to student aid programs are possible based on future congressional action and the work of the deficit super committee.

  • Over the next several months, the Congressional Super Committee will strive to find an additional $1.5 trillion in savings to be spread out over the next 10 years, which could come from cuts to student aid programs;
  • If the Super Committee fails to come up with the required $1.5 trillion in savings to the overall budget, automatic across-the-board cuts would be enacted that would negatively impact nearly all student aid programs;
  • Cuts and/or changes to student aid programs could be enacted through the traditional Congressional appropriations process.

Annual loan limits are unchanged for graduate and professional students.

Affected: Graduate and Professional Students Borrowing Direct Stafford Loans

The annual Federal Direct Stafford Loan limit for graduate and professional students remains unchanged at $20,500 (higher limits apply to medical students), but this amount will be limited to Direct Unsubsidized Loans. The aggregate limits remain unchanged as well at $138,500 (higher limits apply to medical students). Any Direct Subsidized Loan received for loan periods beginning before July 1, 2012 will still count toward the annual and aggregate loan limits for a student. Please note that the cost of attendance and other aid received are also taken into account when your financial aid award is determined, thus, in some cases a student will not be able to borrow up to the maximum annual loan limit for Direct Stafford Loans.

Elimination of repayment incentives on loans disbursed on or after July 1, 2012.

Affected: All Direct Loan Borrowers

The Department of Education is prohibited from authorizing or providing repayment incentives on new Direct Loans disbursed on or after July 1, 2012. Currently, there is a repayment incentive in place that effectively reduces the origination fee on federal loans to .5% for Stafford and 2.5% on PLUS, as long as the borrower makes the first 12 consecutive payments on-time. With the elimination of this incentive, the origination fees on loans disbursed on or after July 1, 2012 will be 1% for Stafford and 4% for PLUS. These are the current rates, and are subject to change.

No cuts to Pell Grant program for 2011-12; future funding level unknown.

Affected: Students Pursuing First Bachelor’s Degree

The Budget Control Act of 2011 did not include any legislation to reduce funding for the Pell Grant program for 2011-12, but the funding level for 2012-13 and beyond is unknown. This grant program is need-based and only available to students pursuing their first Bachelor’s Degree. Pell Grant eligibility and amount for a student is based on the Expected Family Contribution (EFC) determined from the information submitted on the Free Application for Federal Student Aid (FAFSA). For more information about the Federal Pell Grant program, please visit

New Special Direct Consolidation Loan.

Affected: Some student loan borrowers with federal loans serviced by multiple entities, including the Department of Education.

In October 2011, President Obama announced a new Special Direct Consolidation Loan that will be offered to eligible borrowers between January and June 30, 2012. Eligible borrowers will be contacted by a Department of Education servicer in January 2012. This new consolidation option may help borrowers who currently have at least one loan serviced by the Department of Education and at least one federal loan serviced by an FFEL (Federal Family Education Loan) lender, such as VSAC or Sallie Mae. This program does not apply to private (alternative) student loans. Please click here for more information about this new short-term consolidation loan option. Please note that it is critical that you do not start the traditional Direct Consolidation Loan process if you will be considering the Special Direct Consolidation Loan, as it will make you ineligible.

Last modified December 05 2011 11:42 AM

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