Student Assistance Amendments of 1981

Student Assistance Amendments of 1981 - Amends the Higher Education Act of 1965 to establish a needs basis for Federal payments to reduce student interest costs. Declares that a student qualifies for a portion of an interest payment if: (1) such student's adjusted family income is $25,000 or less; or (2) (if greater than $25,000) the eligible institution provides the lender with a statement of need determination and a loan recommendation to cover such need. Includes specified amounts paid under the Social Security Act or as veterans' benefits in a student's estimated financial assistance for such purposes.

Raises the annual interest rate on loans to parents of dependent undergraduate students from nine percent to 14 percent.

Revises need analysis provisions for higher education student assistance programs. Includes any amount paid the student under specified veterans' benefits provisions (formerly included only one-half such amount) in the determination of effective family income.

Directs the Secretary of Education to set a series of assessment rates to be applied to parental discretionary income in determining the expected family contribution. Eliminates a provision excluding all equity in a single principal place of residence from the computation of assets of a student or family. Raises the asset reserve which may be deducted from the net value of such assets from $10,000 to $25,000. Repeals specified requirements relating to special regulations for determining the expected family contribution and effective family income of independent students.

Revises the definition of "cost of attendance" for student aid purposes.

Removes the separate borrowing limits for independent students for loans covered by Federal loan insurance.