FY 21 SEQUESTER-REQUIRED CHANGES TO THE TITLE IV STUDENT AID PROGRAMS

Beginning on October 1, 2020 origination fees on Direct Loans including Direct PLUS Loans, are changing. Iraq-Afghanistan Service Grants (IASG) and TEACH Grant awards are also changing. These changes will apply to all loans, IASG and TEACH Grants where a first disbursement is made on or after October 1, 2020, so be sure to update your financial aid system to account for them.

The origination fees have been changing every October 1st because of the Budget Control Act of 2011, known as the sequester law. For Federal Fiscal Year 21 (October 1, 2020 – September 30, 2021):
The loan fee for Direct Subsidized Loans and for Direct Unsubsidized Loans is 1.057%. For example, the fee on a $5,500 loan will be $58.13.

The loan fee for Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers) is 4.228%. For example, the fee on a $10,000 PLUS Loan will be $422.80.

An Iraq-Afghanistan Service Grant where the first disbursement is on or after October 1, 2020 and before October 1, 2021 requires a reduction of 5.7 percent from the award amount for which the student would otherwise have been eligible.

A TEACH Grant where the first disbursement is on or after October 1, 2020 and before October 1, 2021 requires a reduction of 5.7 percent from the award amount for which the student would otherwise have been eligible.

For more information about the sequester changes see this electronic announcement from FSA.