Impact of Sequestration on Federal Student Aid

On August 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as a “sequester,” to take effect if Congress failed to enact legislation to reduce the federal deficit by March 1, 2013. Because Congress did not act, the budget cuts went into effect on March 1, 2013. Learn about the impact of sequestration on Federal Student Aid programs.

Interest Rates for Direct Loans

Congress sets interest rates on Direct Loans from the U.S. Department of Education through legislation that ties the rate to financial markets. The chart below displays the  interest rates for Direct Subsidized, Direct Unsubsidized, and Direct PLUS Loans first disbursed on or after July 1, 2017 and on or before June 30, 2018.
LoanInterest Rate
Direct Subsidized Loan (Undergraduates)4.45%
Direct Unsubsidized Loan (Undergraduates)4.45%
Direct Unsubsidized Loan (Graduate/Professional Students)6.00%
Direct PLUS Loans (Parents and/or Graduate or Professional Students)7.00%

Early FAFSA and Prior Prior Year Tax Data

In Fall 2015 the President announced two major changes to the Free Application for Federal Student Aid (FAFSA) process. While traditionally the FAFSA filing cycle begins on January 1 of the year preceding the award/academic year (e.g. January 1, 2016, for the 2016-2017 award/academic year), beginning with the 2017-2018 FAFSA cycle, the application will become available to students and their families three months earlier on October 1 (e.g. October 1, 2016, for the 2017-2018 award/academic year). The second change announced by the President is that again, beginning with the 2017-2018 cycle, the FAFSA will collect income information from the tax/calendar year one year earlier than has been used in the past. Thus, for the 2017-2018 FAFSA, students and families will provide income information from calendar year 2015 and not from calendar year 2016. Because of this, almost all tax return filers will be able to electronically transfer their tax information directly into their FAFSA by using the IRS Data Retrieval Tool (DRT). To learn more about these changes, visit

Time Limitation on Direct Subsidized Loan Eligibility for First-Time Borrowers

For first time Federal student loan borrowers on or after July 1, 2013, there is a limit on the time you can receive a Direct Subsidized loan. Subsidized loan eligibility will be limited to 150 percent of the published length of your academic program. After you have received Direct Subsidized loans for your maximum eligibility period, you will only be eligible to borrow Direct Unsubsidized loans. In addition, if you continue to be enrolled in an undergraduate program after receiving the maximum Direct Subsidized Loans, you will be responsible for the interest that accrues on your subsidized loans.

Rules for State University Grant Eligibility

The CSU has endorsed changes to the rules for awarding State University Grants. To be eligible to receive a State University Grant beginning in Fall 2013, students must meet the following criteria:

  • Be enrolled at least half-time;
  • Undergraduate students cannot have accumulated more than 150 semester units;
  • Undergraduate transfer students cannot have accumulated more than 75 semester units at the CSU;
  • Credential students cannot accumulate more than 30 units.
  • Masters students cannot accumulate more than 125% of the required units.
  • Students pursuing a second Bachelor’s, second Credential or second Master’s degree are not SUG eligible regardless of where they received their previous degree(s).
  • Due to limited funding, CSU Channel Islands reserves the right to primarily award available SUG funds to first-time Undergraduate students and does not award SUG funds to Credential or Graduate students.

    Please note: Advanced Placement, international Baccalaureate, Military credit and Pre-baccalaureate credit and credit by examination will not count against the new SUG limits. 


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