DIRECT LOAN ORIGINATION FEES EFFECTIVE OCTOBER 1, 2017

It’s October 1st and that means origination fees on direct loans are changing again. Blame it on the Budget Control Act of 2011. Since 2013 the sequester law has been a nuisance for college financial aid administrators working with Federal Direct Student Loans. Unfortunately, the sequestration law isn’t set to expire until 2021.

Beginning on October 1, 2017 the loan origination fees have gone down slightly. For Federal Direct Loans where the first disbursement is made on or after October 1, 2017, and before October 1, 2018 the origination fees are as follows:

  • The loan fee for Direct Subsidized Loans and for Direct Unsubsidized Loans is 1.066%. For example, the fee on a $5,500 loan will be $58.63.
  • The loan fee for Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers) is 4.264%. For example, the fee on a $10,000 PLUS Loan will be $426.40.

Sequestration doesn’t just impact Federal Direct Loans, it impacts other forms of aid too including the Iraq – Afghanistan Service Grant Program and TEACH Grant Program, both of which require a reduced award amount for any grant that is first disbursed during the time the sequester is in effect. For more information about these programs, check out this electronic announcement from Federal Student Aid.