Because the Budget Control Act of 2011 (the sequester law) remains in effect, this announcement provides information regarding sequester-required increases to Direct Loan fees and sequester-required reductions in TEACH Grant award amounts that apply to loans and grant awards where the first disbursement is on or after Oct. 1, 2024, and before Oct. 1, 2025 (FY 25 Sequester). For FY 25, the sequester-required changes are the same as the FY 24 sequester-required changes.
Direct Loan Program
The terms of the sequester increase the loan fees charged to Direct Loan borrowers for Direct Subsidized/Direct Unsubsidized and Direct PLUS Loans from their statutory rates of 1 percent and 4 percent, respectively.
The FY 25 sequester fees are the same as the FY 24 sequester fees. This means for all loans where the first disbursement is made on or after Oct. 1, 2020, and before Oct. 1, 2025, the loan fees are as follows:
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1.057% for Direct Subsidized Loans and for Direct Unsubsidized Loans. As an example, the loan fee on a $5,500 loan would be $58.13.
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4.228% for Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers). As an example, the loan fee on a $10,000 loan would be $422.80.
Loan fee calculations that result in more than two decimal places must be truncated (not rounded) to two digits after the decimal point (cents).
Note: Institutions may now begin submitting Direct Loan origination records to the COD System where the first disbursement will be on or after Oct. 1, 2024, using the loan fees provided in this announcement.
TEACH Grants
The terms of the sequester require a reduction in the statutory award amounts for TEACH Grants.
The FY 25 sequester percentage reduction is the same as the FY 24 sequester reduction. Therefore, the statutory award amount for all TEACH Grant awards where the first disbursement is on or after Oct. 1, 2020, and before Oct. 1, 2025, must be reduced by 5.70%, as shown below.
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5.70% reduction from the TEACH Grant statutory maximum award amount of $4,000. This is a dollar reduction of $228, resulting in an adjusted maximum award amount of $3,772.
Special Note about Iraq and Afghanistan Service Grants
As a result of the FAFSA Simplification Act, no new Iraq and Afghanistan Service Grants will be made in the 2024–25 award year. Instead, eligible students will receive a maximum Pell award under the Special Rule described in HEA Section 401(c), as amended. For more information on this process, see the Electronic Announcement published March 15, 2024 (GRANTS 24-03).
However, the FY 24 sequester percentage reduction remains in effect for Iraq and Afghanistan Service Grants for the 2023–24 award year. For information about FY 24 sequester-required reductions for such awards, refer to Electronic Announcement published May 15, 2023 (GENERAL 23-37).
Contact Information
If you have questions about this announcement, contact the FSA Partner and School Relations Center at 1-800-848-0978. You may also email CODSupport@ed.gov.