Posted Date: April 26, 2013

Author:  Jeff Baker, Director, Policy Liaison and Implementation, Federal Student Aid

Subject: IMPORTANT UPDATE: Changes in Sequestration Required Reductions

Note: Through subsequent communications, we have posted updated sequestration guidance for Iraq and Afghanistan Service Grants. Dear Colleague Letter GEN-13-22, posted on October 17, 2013, includes revised reduction amounts for grants having a first disbursement date on or after October 1, 2013 and before October 1, 2014. Dear Colleague Letter GEN-14-10, posted on May 2, 2014, includes revised reduction amounts for grants having a first disbursement date on or after October 1, 2014 and before October 1, 2015.

In three previous Electronic Announcements (March 1, 2013, March 15, 2013, and April 5, 2013) we provided the financial aid community with information on how the sequester would impact the Title IV student financial aid programs.  This Electronic Announcement provides important information regarding a change in the percentage reductions that institutions must apply to awards made in the TEACH Grant and Iraq Afghanistan Service Grant programs.

In the March 15, 2013 Electronic Announcement, we  notified institutions that, due to the sequester,  Iraq-Afghanistan Service Grants awards and TEACH Grant awards with a first disbursement  made after March 1, 2013, must be reduced  by 37.8 percent and 12.6 percent respectively.  We have now been notified that the Office of Management and Budget (OMB) has recalculated the required reduction percentages for these programs.

Iraq-Afghanistan Service Grants

Any Iraq-Afghanistan Service Grant award where the first disbursement is made after March 1, 2013 (including both 2012-2013 and 2013-2014 awards) must be reduced by 10.0 percent from the award amount for which the student would otherwise have been eligible to receive.  In our earlier notification we had said that the reduction would be 37.8 percent.

TEACH Grants

Any TEACH Grant award where the first disbursement is made after March 1, 2013 (including both 2012-2013 and 2013-2014 awards) must be reduced by 7.1 percent from the award amount for which the student would otherwise have been eligible to receive.  In our earlier notification we had said that the reduction would be 12.6 percent.

An institution that had disbursed funds to students from these programs using the earlier reduction percentages must disburse the additional funds to the affected students and update any previously reported information to COD.

Again, we thank you for your patience and understanding.

   

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