The U.S. Department of Education announced that the federal sequester-related adjustments to Title IV student aid programs for Fiscal Year 2027.
Direct Loan Program
The sequester increases the loan fees charged to Direct Loan borrowers for Direct Subsidized/Direct Unsubsidized and Direct PLUS Loans from their statutory rates of 1 percent and 4 percent, respectively.
The FY27 sequester fees are the same as FY26 sequester fees. This means for all loans where the first disbursement is made on or after Oct. 1, 2020, and before Oct. 1, 2027, the loan fees are as follows:
- 1.057% for Direct Subsidized Loans and Direct Unsubsidized Loans. As an example, the loan fee on a $5,500 loan would be $58.13.
- 4.228% for Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers). As an example, the loan fee on a $10,000 loan would be $422.80.
Loan fee calculations resulting in more than two decimal places must be truncated (not rounded) to two digits after the decimal point (cents).
Note: Institutions may submit Direct Loan origination records to the COD System where the first disbursement will be on or after Oct. 1, 2026, using the loan fees provided in this announcement.
TEACH Grants
The terms of the sequester require a reduction in the statutory award amounts for TEACH Grants.
The FY27 sequester percentage reduction is the same as the FY 26 sequester reduction. Therefore, the statutory award amount for all TEACH Grant awards where the first disbursement is on or after Oct. 1, 2020, and before Oct. 1, 2027, must be reduced by 5.70%, as shown below:
- 5.70% reduction from the TEACH Grant statutory maximum award amount of $4,000. This is a dollar reduction of $228, resulting in an adjusted maximum award amount of $3,772.
SOURCE: (GENERAL-26-28) FY27 Sequester-Required Changes to the Title IV Student Aid Programs