The Student Aid and Fiscal Responsibility Act, or SAFRA, was signed into law by President Obama on March 30, 2010, and has greatly impacted the financial aid landscape.
The most significant change that has resulted from SAFRA has been the elimination of the FFELP government assistance program, which allowed federal student loans to be provided by independent, private third-party lenders.
Elimination of FFELP
With the abolishment of the FFEL Program all federal student loans will now be a part of the Direct Loan Program, and will therefore come directly from the Department of Education, without the need of a private lender. The availability of federal education loans will actually increase as a result of SAFRA, and even though FFELP has been deprecated, you can still expect to have the same access to federal student aid as you would have before SAFRA was enacted.
You should now be aware that because FFELP is gone, all student loans that are being offered by private lenders will in-fact be private student loans, and not federal student loans.
To apply for most federal education loans you will now only have to complete the FAFSA, and not have to worry about applying to any third-party lenders. The bottom-line is that if you are filling out a student loan application that is provided by a private lender you are applying for a private student loan, regardless of what the lender may tell you.
Pell Grant Changes
Other notable changes that have happened as a result of SAFRA include modifications to the Pell Grant Program.
These changes include a slight increase in loan amounts, an increase in overall access, and a time-based policy that will increase the maximum Pell Grant amount according the Consumer Price Index plus one percent starting in 2013-14. This was implemented to combat the price of inflation, and it remains to be seen whether or not this change will deliver on its initial promise.
