Reminders & Updates
Impact of Sequestration of Title IV Student Aid Programs (update)
Posted on April 11, 2013
IMPACT OF SEQUESTRATION ON TITLE IV STUDENT AID PROGRAMS
On April 5, 2013, the Federal Student Aid department informed all institutions that for both Direct Subsidized and Direct Unsubsidized Loans and for Direct PLUS Loans (for both parent and graduate student borrowers) the increased loan fee percentages will be applied to any loan disbursement for a loan where the first disbursement of the loan will be made on or after July 1, 2013. This includes loans that will be made for the remainder of the 2012-2013 academic year, loans that will be made for summer 2013, and loans that will be made for the 2013-2014 academic year and forward.
On August 2, 2011, Congress passed the Budget Control Act (BCA) of 2011, which put into place an automatic process of “across-the-board” Federal budget cuts, known as the sequester. On March 1, 2013, Congress failed to enact legislation to reduce the Federal deficit. As a result, certain loan fees paid by borrowers will be increased during the time the sequester is in effect which will affect the Net Amount of your disbursement as follows:
- For Direct Subsidized and Direct Unsubsidized Loans where the FIRST DISBURSEMENT of the loan is after the sequester takes effect, the current loan fee of 1 percent of the principal amount of a loan will increase. We presently anticipate that the rate will increase to approximately 1.051 percent.
- For Direct PLUS Loans for both parent and graduate and professional student borrowers where the FIRST DISBURSEMENT of the loan is after the sequester takes effect, the current loan fee of 4 percent will increase. We presently anticipate that the rate will increase to approximately 4.204 percent.
Students have the right to cancel all or part of their loan should they decide they no longer need to help pay for their educational costs. If you have any questions regarding canceling your loans, please contact the Office of Financial Aid at (805) 493-3115.