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 Iraq and Afghanistan Service Grant and TEACH Grant award amounts that apply to loans and grant awards where the first disbursement is on or after Oct. 1, 2022, and before Oct. 1, 2023 (FY 23 Sequester). For FY 23, the sequester-required changes are the same as the FY 22 and FY 21 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% and 4%, respectively.
The FY 23 sequester fees are the same as the FY 22 and FY 21 sequester fees. This means for all loans where the first disbursement is made on or after Oct. 1, 2020, and before Oct. 1, 2023, 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, 2022, using the loan fees provided in this announcement.
Iraq and Afghanistan Service Grants and TEACH Grants
The terms of the sequester require a reduction in the statutory award amounts for Iraq and Afghanistan Service Grants and TEACH Grants.
The FY 23 sequester percentage reduction is the same as the FY 22 and FY 21 sequester reduction. Therefore, the statutory award amount for all Iraq and Afghanistan Service Grant awards and TEACH Grant awards where the first disbursement is on or after Oct. 1, 2020, and before Oct. 1, 2023, must be reduced by 5.70%, as shown below.
Iraq and Afghanistan Service Grants
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5.70% reduction from the 2022–23 award year Iraq and Afghanistan Service Grant statutory award amount of $6,895. This is a dollar reduction of $393.01, resulting in an adjusted 2022–23 award amount of $6,501.99.
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5.70% reduction from the 2021–22 award year Iraq and Afghanistan Service Grant statutory award amount of $6,495. This is a dollar reduction of $370.21, resulting in an adjusted 2021–22 award amount of $6,124.79.
Institutions with systems that require award amounts to be in whole dollars must ensure that a student’s total award amount is rounded down to the next lowest dollar.
Note: Because the sequester-required percentage is not changing from FY 22, the COD System will continue to display and process all Iraq and Afghanistan Service Grant origination records submitted with the sequestration-limited maximums provided in this announcement.
TEACH Grants
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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.
Contact Information
If you have questions about this announcement, contact the COD School Relations Center at 1-800-848-0978. You may also email CODSupport@ed.gov.