Sequester Changes and Operational Guidance for Direct Loan Fee Change

As has been the case for the last few years, Sequester changes kick in beginning on October 1, 2016; the start of the Federal Government’s Fiscal Year. These changes impact loan origination fees in the Direct loan program and make reductions to the Iraq-Afghanistan Service Grant and Teach Grant programs where the first disbursement is made on or after 10/1/2016. I summarized this below for you but you can read GEN-16-11 here if you really want to: http://bit.ly/29hbdac

Direct Loan Program
For loans where the first disbursement is made on or after October 1, 2016 and before October 1, 2017 –
The loan fee for Direct Subsidized Loans and for Direct Unsubsidized Loans is 1.069%. For example, the fee on a $5,500 loan will be $58.79.
The loan fee for Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers) is 4.276%. For example, the fee on a $10,000 PLUS Loan will be $427.60.

Iraq-Afghanistan Service Grants
An Iraq-Afghanistan Service Grant where the first disbursement is on or after October 1, 2016 and before October 1, 2017 requires a reduction of 6.9 percent from the award amount for which the student would otherwise have been eligible (i.e., the maximum Federal Pell Grant award amount for the relevant award year).

Teach Grants
A TEACH Grant where the first disbursement is on or after October 1, 2016 and before October 1, 2017 requires a reduction of 6.9 percent from the award amount for which the student would otherwise have been eligible.
Schools should be sure to prepare for this change by reviewing their anticipated awards to ensure that the correct fees are applied, thus, here’s some guidance related to dealing with packaging, originating and disbursing awards on COD under Sequester, click here: http://bit.ly/29eIhAN