Changes to Federal Aid Programs for 2013-14

The Office of Financial Aid would like to share with you a number of changes to student federal loans and grants for the 2013–2014 academic year as a result of the Consolidated Appropriations Act, 2012 and the College Cost Reduction and Access Act of 2007.

New Federal Student Loan Interest Rates 

The Bipartisan Student Loan Certainty Act ties the interest rate for federal student loans to the yield on the U.S. Treasury 10-year borrowing rate. The Act, which affects federal student loans that are first disbursed on or after July 1, 2013, establishes a cap for the maximum interest that can be charged for federal student loans.

Undergraduate Students

  • The interest rate for subsidized and unsubsidized Stafford Loans as of July 1, 2013 through June 30, 2014 is 3.86% with a rate cap of 8.25% 
  • The interest rate for a PLUS Loan is 6.41% with rate cap of 10.5%

Graduate Students

  • The interest rate for an unsubsidized Stafford Loan as of July 1, 2013 through June 30, 2014 is 5.41% with a rate cap of 9.5% 
  • The interest rate for a PLUS Loan is 6.41% with rate cap of 10.5%

Expected Family Contribution
A change has been made to the income amount that is used to determine if a student qualifies for an automatic Expected Family Contribution (EFC) of zero.

  • When you complete the Free Application for Federal Student Aid (FAFSA), you receive an EFC number that is used to determine your federal student aid eligibility. For the 2012–2013 school year, you will automatically qualify for an EFC of zero if your family income does not exceed $23,000. This is a reduction from the previous maximum income of $32,000.

Federal Verification Process
Schools are no longer allowed to accept personal tax returns for verification purposes. If a student is selected for the verification process, he or she must now submit an official IRS tax return transcript.

Federal Pell Grant Program
Once you have received a Pell Grant for 12 semesters, or the equivalent, you will no longer be eligible for additional Pell Grants.

  • Equivalency is calculated by adding together the percentage of your Pell eligibility that you received each year to determine whether the total amount exceeds 600%. If you have exceeded the 600% maximum, you will lose eligibility for additional Pell Grants beginning in the 2012–2013 school year.
  • For example, if your maximum Pell Grant award amount for the 2010–2011 school year was $5,550, but you only received $2,775, you would have used 50% of your maximum award for that year. If you then receive 75% of your eligibility in the next year, the total received in two years would be 125% out of the total 600% lifetime limit. 

Federal Direct Loan Changes

Interest subsidies for subsidized loans have been eliminated.
Direct subsidized loans will not be eligible for an interest subsidy during the six-month grace period.

Interest rates have changed for undergraduate subsidized loans.
All subsidized loans made to undergraduate students will have a fixed interest rate of 3.86%.

  • Subsidized loans for which the first disbursement is on or after July 1, 2013 have a 3.86% fixed interest rate. Pending action by the U.S. Congress, interest rates on federal student loans may be adjusted. 

Graduate students are no longer eligible to receive subsidized loans.

  • Effective for loans made for loan periods that begin on or after July 1, 2012, graduate students are no longer eligible to receive subsidized loans. However, if you are a graduate or professional student, you may still qualify for up to $20,500 in unsubsidized loans each award year. 

The U.S. Department of Education can no longer offer borrowers repayment incentives.

  • Effective for loans first disbursed on or after July 1, 2012, the Department of Education is prohibited from offering any repayment incentives to Federal Direct Loan borrowers. Incentives include upfront interest rebates, reduced interest rates, and reduced origination fees. However, interest rate reductions to borrowers who agree to have payments automatically electronically debited from their bank account are allowed.

Sequestration Impact on Federal Aid Programs

The U.S. federal government sequestration order requires mandatory cuts to federal financial aid programs.  Military Tuition Assistance programs were originally impacted but funding has been restored. While we expect more specific information from the impacted federal agencies, here is what we know:

Federal Direct Loan Programs

  • Loan fees for Federal Direct Loans (Stafford and PLUS) with first disbursements scheduled after March 1, 2013, will increase.
    • Direct Subsidized or Direct Unsubsidized Loan fees will increase from 1.0% of the principal amount of a loan to 1.051%. 
    • Direct PLUS Loan fees for parent and graduate student borrowers will increase from 4.0% to 4.204%.
    • The U.S. Department of Education (DOE) has instructed schools to continue disbursing student loans using existing fee rates; borrowers will be notified by the DOE via email (and where necessary, US mail) of the increase in their loan fee .  If necessary, the DOE will work with borrowers to collect any difference between the fee that was applied to the disbursement of the Direct Loan and the increased fee required by the sequester.

Federal Grants and Federal Work-Study

  • The Federal Pell Grant Program is not impacted by sequestration, so students receiving these grant funds will not see any changes
  • While the Federal Supplemental Educational Opportunity Grant and Federal Work-Study are not impacted in the current 2012-2013 award year, students should note that reductions in funding for these programs are targeted for the 2013-2014 award year.

Please contact our Office of Financial Aid at or via phone at 312.752.2070 if you have specific questions about the impact of the sequester on your federal financial aid program. Additional information is also available at or

You may also visit Student Aid on the Web to learn about these changes.