Effects of Sequester on Federal Direct Loan Origination Fees
On August 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as the “sequester.” While this law does not otherwise change the amount, terms, or conditions of your Direct Stafford Loan or the Direct Plus Loan (for both parent and graduate student borrowers) it does increase the loan fees on these loans whose first disbursement is on or after July 1, 2013.
The Direct Stafford Loan fee will increase from 1.0 % of your loan amount to 1.051 %. For example, the fee on a $5,500 loan will increase by $2.80 from $55.00 to $57.80. The Direct PLUS Loan fee will increase from 4.0 % of your loan amount to 4.204 %. For example, the fee on a $10,000 PLUS loan will increase by $20.40 from $400.00 to $420.40.
Lifetime Limit to the Federal Pell Grant Program Beginning 2012-2013
Effective beginning the 2012-2013 award year a student’s eligibility for receiving the Federal Pell Grant will be limited to 12 full-time semesters (or its equivalent). This change applies to all Federal Pell Grant eligible students. It is not limited to students who receive their First Federal Pell Grant on or after 2008-2009 award year. We will calculate the Pell Grant duration for a student by adding together each annual percentages of a student’s scheduled award that was actually disbursed to the student. For example, a student whose 2011-2012 Federal Pell Grant award was $5,550, but who received $2,775 because she was only enrolled for one semester, will have used 50% of that award year’s schedules award. Similarly, a student who was enrolled three quarter time (9 credits) for the 2011-2012 award year would have used 75% of their scheduled award. www.studentaid.ed.gov/pell-limit
Termination of Direct Loan Borrower Repayment Incentives
Effective, July 1, 2012, the up-front rebate that has been provided to Direct Loan borrowers at the time of their loan disbursement will no longer be offered. As a result, the 0.5% origination fee for the Direct Stafford Loans will be 1% and the 2.5% origination fee for the Direct PLUS Loans will be 4.0%.