Graduate Theological Union

Financial Aid Announcements

Further Impact of Sequestration on Student Loans (Nov. 2013)
Impact of the Government Shutdown on Federal Student Aid Systems (Oct. 2013)
New Direct Loan Interest Rates
Impact of Sequestration on Student Loans

 

Further Impact of Sequestration on Student Loans
Under the Budget Control Act of 2011, additional sequester funding reductions took effect with the start of the 2014 Federal fiscal year (FY 2014). The information here applies to FY 2014 only: 

As of October 1, 2013, the sequester increases the origination fees charged to Direct Loan borrowers beyond last year's increases.  The new loan fee percentages will apply only with regard to loans where the first disbursement is made on or after December 1, 2013.  The new loan fees are 1.072 percent for Direct Subsidized Loans and Direct Unsubsidized Loans and 4.288 percent for Direct PLUS Loans (both parent and graduate student PLUS Loans).  The loan fees on Direct Loans where the first disbursement was or will be made on or after July 1, 2013 and prior to December 1, 2013 continue to be those noted below (see 'Sequestration and New 2013-14 Direct Loan Fees, below) - 1.051 percent for Direct Subsidized and Direct Unsubsidized Loans and 4.204 percent for Direct PLUS Loans, regardless of when any second or subsequent disbursements are made.

The increased loan fee percentages must be applied to any loan disbursement for a loan where the first disbursement will be made on or after December 1, 2013.  This includes loans that will be made for the remainder of the 2013-2014 academic year and loans that will be made for summer 2014.  At this time, we have no information about the amount of the loan fees for Direct Loans that will be first disbursed on or after October 1, 2014.
 

Impact of the Government Shutdown on Federal Student Aid Systems (Oct. 2013)
While Department of Education offices are closed during the partial government shutdown, the majority of Title IV (Federal Student Aid) processors, contact centers, and Web sites remain operational. Students may continue to complete FAFSA applications, promissory notes, and entrance counseling and may continue to request and receive federal student aid.  Additionally, all federal student loan servicing will remain operational and the Department will continue processing consolidation applications via the Direct Consolidation Loans website.  Questions related to federal student aid processing during the government shutdown may be directed to the Consortial Financial Aid Office at finaid@gtu.edu.
 

New 2013-14 Direct Loan Interest Rates
This month, President Obama signed into law the Bipartisan Student Loan Certainty Act of 2013. The new law amends the Direct Loan interest rate section of the Higher Education Act of 1965, as amended (the HEA). Specifically, the new law amends section 455(b) of the HEA to provide new formulas for the determination of interest rates for all Direct Loan types for which the first disbursement is made on or after July 1, 2013. The new interest rate determination also applies to Direct Consolidation Loans for which the consolidation loan application was received by the Department on or after July 1, 2013.

Under this law, interest rates will be established each year for Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans for which the first disbursement is on or after July 1 through the following June 30. For the 2013-14 year, the fixed rates for graduate/professional students are as follows:

Direct Unsubsidized Loan: 5.41%
Direct Graduate Plus Loan: 6.41%

For more detailed interest rate information, visit http://studentaid.ed.gov/About/announcements/interest-rate.
 

Sequestration and New 2013-14 Direct Loan Fees
On August 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as a “sequester,to take effect if Congress failed to enact legislation to reduce the Federal deficit by March 1, 2013. Because Congress did not act, these budget cuts are now in effect. Below is a summary of the impact of these budget cuts on federal student aid programs for graduate students:

  • For a Direct Unsubsidized Loan, the loan (or origination) fee will increase from 1.0 percent of the principal amount of a loan to 1.051 percent. For example, the fee on a loan for $20,500 will be increased by $10.46 from $205.00 to $215.46.
  • For a Direct Graduate PLUS Loan, the loan fee will increase from 4.0 percent to 4.204 percent. For example, the fee on a $3,000 Direct Graduate PLUS Loan will increase by $6.12 from $120 to $126.12.

For more information about the impact of sequestration on federal student aid programs, see https://studentloans.gov/myDirectLoan/images/SequestrationImpact.pdf.