Skip to main content
FAME Regulatory BulletinFront Page

ED Distributed New Information Regarding The Effects of Sequestration

ED distributed new information late Friday, April 26, 2013 in an Electronic Announcement regarding the effects of sequestration. This latest information modifies the prior announcements regarding sequestration. Specifically affected is the percentage of reduction to be used in calculating Iraq & Afghanistan Service Grants (IASG) and TEACH Grants. The Office of Management and Budget (OMB) has recalculated the required percentage reduction for these programs to be 10.0 percent for IASG and 7.1 percent for TEACH Grants. The percentages previously announced were 37.8 percent and 12.6 percent, respectively. Therefore, this change will allow for slightly higher grants from these two programs than previously announced for awards that have a first disbursement on or after March 1, 2013.

The method schools use for calculating the correct IASG and TEACH Grant award amounts for students remains the same as published in the DYK released earlier on April 26, 2013. The only difference in that information is the new percentages ED just released after the last DYK on sequestration was released this past Friday. The sequestration changes for IASG and TEACH Grants only apply to awards made with a first disbursement on or after March 1, 2013. Therefore, the sequestration changes could affect a student’s award for both 2012-2013 and 2013-2014, depending upon when the first disbursement is made.

Also, there were no further changes to information about the loan origination fee percentages. The new loan origination fees as a result of sequestration remain, as previously announced, at 1.051 percent for Direct Subsidized and Unsubsidized Loans with a first disbursement on or after July 1, 2013. The new loan origination fee for Direct PLUS Loans is 4.204 percent for all new PLUS Loans with a first disbursement made on or after July 1, 2013.

Please review the DYK released on April 26, 2013 for more information about the effects of sequestration.


Leave a Reply