Posted Date: April 24, 2014

Author:  Sue O'Flaherty, Service Director, Program Management, Federal Student Aid

Subject: COD System Operational Notice - Direct Loan Origination Fee Percentages Will Change for FY 2015

As explained in previous guidance issued by the Department of Education (the Department), the loan origination fee percentages for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans (for both parent borrowers and graduate and professional student borrowers) will change each federal fiscal year (FY) that the Budget Control Act of 2011 (sequester law) is in effect.  Because the sequester law is still in effect, mandatory sequester changes for FY 2015 will be required effective October 1, 2014.  Accordingly, there will be a change in the Direct Loan origination fee percentages for loans that are first disbursed on or after October 1, 2014 and before October 1, 2015.

Shortly, the Department will issue a Dear Colleague Letter that explains the FY 2015 sequester required changes to the Title IV federal student aid programs.  That Dear Colleague Letter will include the Direct Subsidized Loan, Direct Unsubsidized Loan, and Direct PLUS origination fee percentages for FY 2015.  Following the Dear Colleague Letter, we will post another Electronic Announcement that provides operational updates and information about Common Origination and Disbursement (COD) System readiness for processing Direct Loans that will be first disbursed on or after October 1, 2014.

Until the Dear Colleague Letter and the Electronic Announcement have been posted, we strongly encourage schools to refrain from submitting origination records to the COD System for Direct Loans that will be first disbursed on or after October 1, 2014.  Any such loan records that are submitted prior to that operational guidance will need to be corrected.

Contact Information

If you have questions about this announcement, contact the COD School Relations Center at 800/848-0978 for Direct Loans.  You may also e-mail


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