Recent Federal Student Aid Changes
Recent Federal Student Aid Changes

» Recent Federal Student Aid Changes

Recent legislative changes have altered certain aspects of federal student loans. As regulations change, the Office of Financial Aid updates all materials and makes every effort to disseminate that information to our students and their families. Please see the most recent changes below.

Origination Fees

On August 2, 2011, Congress passed the Budget Control Act (BCA) of 2011, which put into place an automatic process of “across-the-board” Federal budget cuts, known as the sequester, to take effect if Congress failed to enact legislation by March 1, 2013 to reduce the Federal deficit. The March 1st deadline passed and Congress failed to enact legislation. Therefore, sequestration has been implemented. As a result, Direct Loan origination fees will increase at the beginning of the Federal fiscal year until sequestration is repealed.

The origination fees are as follows for loans first disbursed between: 

  • October 1, 2020 through September 30, 2021
    • 1.057 % on all Subsidized and Unsubsidized Direct Loans
    • 4.228% on all Parent PLUS Direct Loans
  • October 1, 2019 through September 30, 2020
    • 1.059% on all Subsidized and Unsubsidized Direct Loans
    • 4.236% on all Parent PLUS Direct Loans
  • October 1, 2018 through September 30, 2019
    • 1.062% on all Subsidized and Unsubsidized Direct Loans
    • 4.248% on all Parent PLUS Direct Loans

Subsidized Direct Loan Eligibility Limited to 150% of Academic Program

Effective for new Direct Loans for which the first disbursement is made on or after July 1, 2013, Subsidized Direct Loan eligibility is limited to a maximum of 150% of the student’s current academic program length.

  • Borrowers may receive Subsidized Direct Loans for no more than 150% of the length of the current academic program (ex: 6 years for a 4 year degree)
  • Once a borrower has received Subsidized Direct Loans for 150% of the length of their program, the borrower’s future Subsidized Loan eligibility will end.
  • A student who has received Subsidized Direct Loans for 150% of the length of their program and continues enrollment beyond that point will lose all subsidies on previously received Subsidized Direct Loans and would be required to pay all accumulated interest.
  • This policy is in addition to, and not in place of, the lifetime aggregate loan limits currently in place.

Interest Rate Changes on Federal Student Loans

The College Cost Reduction and Access Act (CCRAA), (Public Law 110-84), was signed into law on August 9, 2013. This amended the Higher Education Act, section 455(b), to provide new formulas for determining interest rates on all Federal Direct Loans. The law ties the fixed interest rates to the sum of the high yield of the 10-year Treasury note plus an additional percentage, with a set cap on the maximum rate that can be assessed for an award year.

Loan Type

Interest Rate Formula

Interest Rates for 2020-2021

(fixed over life of loan)

Interest Rates for 2019-2020

(fixed over life of loan)

Interest Rates for 2018-2019

(fixed over life of loan)

Subsidized/Unsubsidized Direct Loans for Undergraduate Students

T + 2.05%

2.75%

4.53%

5.05%

Parent PLUS Direct Loans T + 4.60% 5.30% 7.08% 7.60%

*T = the 10-year Treasury note rate:

  • 0.700% as of July 1, 2020
  • 2.479% as of July 1, 2019
  • 2.995% as of July 1, 2018

Each year, the interest rates will be determined by the 10-year Treasury note rate as of the preceding June 1st and the rates will be locked for that following year. A loan disbursed within a particular year will carry that rate for the lifetime of the loan.