Federal Update effective March 1, 2013:
How does sequestration impact the Federal Student Aid Programs?
Stafford Loan origination fees are expected to rise from 1.00 to 1.05 percent and PLUS origination fees to rise from 4.00 to 4.20 percent. Annual or aggregate loan limits would not be impacted.
The Office of Management and Budget (OMB) has announced that sequestration will cut overall ED funding by $2.278 billion. For federal student aid, the Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work Study (FWS), TEACH Grant, TRIO, Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), and Graduate Assistance in Areas of National Need (GANN) will each see an estimated 5.0 percent cut during the first year of sequestration.
The Pell Grant is protected from sequestration for the first year. In years 2-10, (Award Years 2014-15 though AY 2022-23) Pell will be subject to cuts as a result of sequestration.
Federal Update effective July 1, 2012:
- Graduate Students will no longer be eligible to receive Federal Direct Subsidized Loans. The annual loan limit for graduates will not change, but will now be limited to Federal Direct Unsubsidized Loans.
- The interest rate for new Federal Direct Subsidized Loans is a fixed at 3.4% for 2012-2013.
- Federal Direct Subsidized Loans will begin accruing interest during the grace period.
- Federal Direct Loans disbursed on or after July 1, 2012 will no longer be offered the up-front interest rebate on the origination fees.