TEACH Grant Sequestration Cuts Changed Yet Again

TEACH Grants first disbursed on or after October 1, 2013 and before October 1, 2014 must now be reduced by .89 percent from the original statutory award amount as a result of sequestration, according to an Electronic Announcement released by the Department of Education (ED) on Dec. 24.

Under direction from the Office of Management and Budget (OMB), ED announced in October that all TEACH Grants first disbursed on or after October 1, 2013 and before October 1, 2014 must be reduced by 7.2 percent due to sequestration cuts scheduled for fiscal year 2014. The latest electronic announcement makes a second change, reducing the cut to TEACH Grants first disbursed on or after October 1, 2013 from 7.2 percent to .89 percent from the original statutory award amount.

This change means that affected students will be eligible for about $250.00 more in TEACH Grant funds. Schools that had disbursed TEACH Grant funds to students using the earlier reduction percentages must update TEACH Grant award amounts and any previously reported information to the Common Origination and Disbursement (COD) system. Likewise, institutions must update TEACH Grant award amounts for upcoming payment periods, to reflect the revised reduction.

There were no changes made to the previously announced 7.2 perceent reduction to the Iraq-Afghanistan Service Grant or Direct Loan origination fee increases.

OMB, not ED, is responsible for the calculations of required sequestration-related reductions to Title IV programs. It is not fully understood why OMB continues to modify these numbers, but NASFAA has made ED aware of the burden, confusion, and unpredictability this causes the financial aid office and students. 

We are hopeful that this will be the last sequestration-related change made to the TEACH Grant for the 2013-14 award year. TEACH, the Iraq-Afghanistan Service Grant, and origination fees should not see any additional sequestration-related changes until the beginning of the next fiscal year—October 1, 2014.  

Discretionary funding for the Pell Grant, Federal Work-Study (FWS) and the Federal Supplemental Educational Opportunity Grant (FSEOG) for award year 2014-15 has not yet been resolved, but Congress is scheduled to work on appropriations upon their return on Jan. 6. The recently passed Bipartisan Budget Act will, at a macro-level, restore some of last year’s discretionary sequestration cuts, and NASFAA has been advocating for the restoration of funds for FWS and FSEOG. Pell Grant funding will also be determined by the upcoming appropriations process and ideally will be determined prior to the release of the 2014-15 Pell schedules. If Pell funding is not determined prior to the release of the schedules, as in recent years, schools will likely have to caveat that awards are not final.

3 Comments

  • So what is the full year dollar amount that should be awarded to students who received their TEACH award after October 1, 2013?

  • That's correct. Students who had their first disbursement on or after March 1, 2013 and before October 1 would face the 6 percent reduction.

    -NASFAA Staff

  • So, the TEACH Grants for students who had their first disbursement before October 1 still have the 6% reduction, where the students with later first disbursements only have a .89% reduction?

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