Direct Loan Origination Fees to Increase!

October 14, 2013

Last spring, the Department of Education announced across-the-board budget cuts known as the sequester on the Federal student financial aid programs. Under the Budget Control Act of 2011, additional sequester funding reduction took effect with the start of the 2014 Federal fiscal year (October 1, 2014 - FY 2014).

The sequester change requires further increases to origination fees on Federal Direct Loans. (The sequester requirements are unrelated to the current temporary shutdown of the US Department of Education due to lack of appropriations.)

As of October 1, 2013, the sequester increases the origination fees charged to Direct Loan borrowers beyond last year's increases. Beginning with Federal Fiscal Year 2014, Direct Loan Origination Fees on Subsidized and Unsubsidized loans will increase from 1.051% to 1.072%, where the first disbursement is made on or after December 1, 2013.

The loan origination fee increase will only affect students who request loans starting with winter and spring terms 2014. If you are a fall term student who has already received a loan disbursement for the 2013-14 award year your loan origination fee will not increase.

What this means to you:


Direct Loan Program Loan Fee Amounts

Loan Type

Impacted Loans

Loan Fee Percent

Fee on a Loan Amount Of




Direct Subsidized Loans and Direct Unsubsidized Loans


First Disbursed on or after 
July1, 2013 and Before 
*December 1, 2013






$57.80 on a
$5,500 loan


First Disbursed on or after December 1, 2013 and
Before *October 1, 2014






*$58.96 on a
$5,500 loan

* Updated by Department of Education on DCL GEN-13-22 on 10/17/2013.