Posted: October 23, 2013
October 1, 2013 marked the first day of the 2014 federal fiscal calendar. With the start of the new fiscal year also comes the start of new budget cuts. There are many different areas of the budget that will be affected by sequestration, and federal financial aid is one of them.
Title IV aid affected:
• Iraq-Afghanistan Service Grants: All grants first disbursed on or after October 1, 2013 must be reduced by 7.2% from the original statutory amounts.
• TEACH Grants: All grants first disbursed on or after October 1, 2013 must be reduced by 7.2% from the original statutory amounts.
• Direct Loans: Origination fees for Direct Loans will increase for loans first disbursed on or after December 1, 2013.
o The origination fees for Direct Subsidized and Unsubsidized will be 1.072%.
o The origination fee for Direct PLUS Loans will be 4.288%.
It is important to note that the effective date for Direct Loans is December 1, 2013, not October 1, 2013. However, if schools have already identified loans that will need to reflect the regulated change, the earliest an institution can submit such records to COD is October 18, 2013. If an institution has sent a record prior to October 18th, the origination must be cancelled and a new origination – reflecting the new origination fees – should be sent after the October 18th timeframe.
Currently, no new information has been released with regard to how campus-based aid will be affected. Unless new guidance is provided, the current allocations will remain in effect. As for how Pell Grant funds are concerned, 2013-2014 grants are exempt from sequestration. The Department of Education will provide grant payment amounts for 2014-2015 after Congress has authorized an appropriation.
For more information, please refer to the Electronic Announcement posted on IFAP.