The U.S. Department of Education has announced that sequester-required changes to Title IV federal student aid programs for Fiscal Year 2026 (FY 26) will remain consistent with those from FY 25. These adjustments, mandated by the Budget Control Act of 2011, affect Direct Loans and TEACH Grants disbursed between October 1, 2025, and September 30, 2026.
Direct Loan Program – Fee Increases Remain
Loan fees are unchanged from FY 2025, but still higher than statutory rates.
- Direct Subsidized & Unsubsidized Loans:
- 1.057% fee (e.g., $58.13 on a $5,500 loan)
- Direct PLUS Loans (Parent & Grad/Prof students):
- 4.228% fee (e.g., $422.80 on a $10,000 loan)
Loan fee calculations resulting in more than two decimal places must be truncated (not rounded) to two digits after the decimal point (cents).
Institutions may begin submitting Direct Loan origination records to the COD System where the first disbursement will be on or after Oct. 1, 2025, using the loan fees provided in this announcement.
TEACH Grant – Award Reduction Continues
The terms of the sequester require a reduction in the statutory award amounts for TEACH Grants.
- 5.70% reduction from the statutory maximum award amount of $4,000, resulting in an adjusted maximum award of $3,772.
For further details, refer to GENERAL-25-20 on the FSA Partner Connect Knowledge Center.
SOURCE: (GENERAL-25-20) FY 26 Sequester-Required Changes to the Title IV Student Aid Programs