Monday, October 14, 2013

New Sequestration Changes Coming to Financial Aid

Announced on Friday, October 11, the Department of Education announced changes from the sequestration. There are some important things to note that have changed and some that haven't changed.

Firstly, Pell Grants are exempted from the sequestration changes for the remainder of the award year. No award amounts have been decided upon for the 2014-15 year yet, and they won't be until a bill providing an appropriation is enacted.

Secondly, campus-based programs (such as FSEOG) are not affected by the new changes either. As far as the 2014-15 award year's allocations are concerned, there is no information yet similar to the information regarding the Pell Grants.

Thirdly, there will be changes to the Iraq-Afghanistan Service Grant. According the letter from the Dept of Education, grant awards where the first disbursement is made on or after October 1, 2013, must be reduced by 7.2% from the original statutory amounts. Grant awards where the first disbursement was made after March 1, 2013, and before October 1, 2013, continue to be covered under the prior sequester and must be reduced by 10% from the original statutory award regardless of when any subsequent disbursement was made.

Fourthly, as of October 1, 2013, the sequester increases the origination fees for Direct Loans. Currently, the loan fees are set at 1.051% for Subsidized and Unsubsidized loans, and 4.204% for PLUS loans. The new loan fees will be 1.072% for Subsidized and Unsubsidized loans, and 4.288% for PLUS loans. These changes are more difficult to implement, so these changes will affect any new loans whose first disbursement is on or after December 1, 2013. Any new loans whose first disbursement was between July 1, 2013, and prior to December 1, 2013, will remain at 1.051% and 4.204%.

Another informative post from your friends at Metro Business College!

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