Sequestration Continues Into Year Three

By Megan McClean, Policy & Federal Relations Staff 

Third year sequester reductions for mandatory funded Federal Student Aid programs have been announced by the Department of Education (ED) in Dear Colleague Letter (DCL) GEN-14-10 posted to IFAP on May 2. The letter spells out fiscal year (FY) 2015 reductions for the TEACH Grant and Iran-Afghanistan Service Grant (IASG) programs and increases to Direct Loan origination fees. 

Fiscal year 2015 will begin on October 1, 2014 and changes announced in the DCL will take affect on awards for which the first disbursement is made on or after that date. 

A TEACH Grant where the first disbursement is on or after October 1, 2014 and before October 1, 2015 will require a reduction of 7.3 percent from the original amount. The IASG will require a reduction of 7.3 percent from the original amount where the award is first disbursed on or after October 1 and before October 1, 2015.

Direct loan origination fees will also increase as follows:

  • For Direct Subsidized Loans and Direct Unsubsidized Loans where the first disbursement is made on or after October 1, 2014 and before October 1, 2015, the fee will be 1.073 percent. (e.g. the fee on a $5,550 loan would be $59.01)
  • For Direct PLUS loans where the first disbursement is made on or after October 1, 2014 and before October 1, 2015, the fee will be 4.292 percent. (e.g. the fee on a $10,000 PLUS Loan will be $429.20) 

The DCL includes a helpful chart showing the decreases and effective dates for 2014-15 as compared to 2013-14. The chart also illustrates various loan origination fees. 

 

Publication Date: 5/5/2014


Marcia T | 5/5/2014 3:3:03 PM

All of this hassle for an extra 5 cents on a $5,500 Stafford loan!

Tracy H | 5/5/2014 12:33:10 PM

Our Fall quarter begins September 29th. The fee rate changes happening July 1st had a much smaller impact on our summer students than on the much larger population of academic year students. I'd like to delay our loan disbursements until October 1st, but that wouldnt' be very good customer service.

Teresa J | 5/5/2014 12:15:38 PM

I agree with Joanne S

Venessa R | 5/5/2014 11:56:02 AM

That's too bad that it cannot begin with the start of the semester for our campus.

Joanne S | 5/5/2014 11:17:28 AM

It worked well when the rates changed in July (in mid-summer), the least busy time of the year. It's extremely difficult when Fall quarter begins 09/23/2014....especially when disbursements are scheduled for five days in advance.

Susan J | 5/5/2014 10:17:16 AM

I thought some of the sequester cuts were dialed back. Or was that only to keep Pell safe?

Theodore M | 5/5/2014 8:31:12 AM

I feel bad for all of you in quarter schools.

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