There’s good news for Direct Loan borrowers and students receiving TEACH Grant awards in the next academic year. as the Direct Loan fees and TEACH award amounts remain unchanged.
A recent Electronic Announcement outlined the sequester-required increases to Direct Loan fees and sequester-required reductions in TEACH Grant award amounts. These apply to loans and grant awards first disbursed on or after October 1, 2025, and before October 1, 2026 (FY 26 sequester).
Direct Loan Program
Loan fees for loans first disbursed on or after October 1, 2020, and before October 1, 2026 will be:
- 1.057% for Direct Subsidized Loans and for 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.
As a reminder, loan fee calculations resulting in more than two decimal places must be truncated (not rounded) to two digits after the decimal point (cents).
Schools may begin submitting Direct Loan origination records to the COD System for loans with a first disbursement on or after October 1, 2025, using the loan fees noted above.
TEACH Grants
The sequester requires a reduction in the statutory award amounts for TEACH Grants. For TEACH Grant awards with a first disbursement on or after October 1, 2020, and before October 1, 2026, the amount must be reduced by 5.70%, as indicated:
- 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.
Questions about this Electronic Announcement should be directed to the FSA Partner and School Relations Center at 1-800-848-0978 or via email at CODSupport@ed.gov.
