Important Changes to Federal Financial Aid for 2013-2014 Academic Year:
Federal Update effective March 1, 2013:
- Undergraduate Federal Direct Subsidized and Unsubsidized Loan interest rate will be fixed at 3.86%.
- Graduate Unsubsidized loan interest rate will be fixed at 5.41%.
- Direct PLUS Loan interest rate will be fixed at 6.41%.
- Origination Fees on Federal Direct Subsidized and Unsubsidized Loan is set at 1.051% and will increase to 1.072% effective December 1, 2013 due to the Budget Control Act of 2011.
- Origination Fees on Federal Direct PLUS Loan is set at 4.204% and will increase to 4.288% effective December 1, 2013 due to the Budget Control Act of 2011.
- New loan borrowers are limited to a maximum of 6 years of Federal Subsidized Loans.
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.