Do You Know that Federal Government Sequestration May Impact Your Financial Aid?
The following explains the sequestration impact by aid program:
Federal Direct Loans
Under the sequestration, certain Federal Direct loan fees paid by borrowers will be increased. This means that for any Direct Loan where the first disbursement is after March 1, the loan fee will increase. The Department of Education anticipates the loan fee rate will increase from 1% to 1.05% but it will issue further information once the rate is determined. With such an increase, for example, the fee on a loan for $5,500 would increase from $55.00 to $57.75, an increase of $2.75.
For Direct Parent Plus Loans any loan where the first disbursement is after March 1, the loan fee will also increase. The Department of Education anticipates the rate will increase from 4% to 4.2% but it will issue further information once the rate is determined. With such an increase, for example, the fee on a $10,000 Direct PLUS loan would increase from $400.00 to $420.00, an increase of $20.00.
Federal Pell Grant
Fortunately, for the current 2012-2013 and 2013-2014 award year the Pell Grant will remain unchanged. However, in 2014-2015, Pell awards are likely to face cuts. The reduction amount is yet to be determined.
Federal College Work-Study and Federal Supplemental Educational Opportunity Grant (SEOG)
Both the federal work-study and FSEOG programs are unchanged for the 2012-2013 award year; however, beginning in 2013-2014, these programs will be reduced by an estimated amount of $32,206. With such a reduction, for example, our work-study budget may deplete a lot sooner and students will have to stop working earlier. With the SEOG program which is awarded to the neediest students who filed their FAFSA by the March 15th priority deadline, funds will be limited.
As more guidance is received from the Department of Education, we will share with you.
I urge you to write to your Congressman about the aid reductions and explain how your financial situation will be further worsened with all of these reductions. To search who is your congressman go to: http://www.house.gov/representatives/find/ .
I will keep you informed as further guidance is received.