Changes to Loans for Graduate Students in 2013–14
Due to failed deficit reduction talks in Congress, an across-the-board budget cutting mechanism known as Sequestration went into effect Friday, March 1, 2013. As a result of these automatic federal budget cuts, loan fees will increase in the following ways:
- For Subsidized and Unsubsidized Direct Loans disbursed after March 1, 2013, the loan origination fee will rise from 1.0 to 1.051 percent.
- For Direct PLUS Loans, origination fees will increase from 4.0 to 4.204 percent.
Students will only see the fee change reflected in their actual disbursements for loans disbursed on or after July 1, 2013. The Department of Education will also make adjustments to collect the increased fee for any loans disbursed after March 1, 2013, but before July 1, 2013.
Loan Interest Rates
The recently enacted Bipartisan Student Loan Certainty Act of 2013 amends the Direct Loan interest rate section of the Higher Education Act of 1965. Under the law, the interest rate for all Direct Loans will be the sum of a 10-year Treasury Note index rate plus a statutory add-on determined by Congress. The rate will be set on the preceding June 1 for loans disbursed during any 12-month period beginning on July 1. Once established, the interest rate will apply for the life of the loan.