Posted Date: May 31, 2013

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

Subject: IMPORTANT UPDATE: TEACH Grant: Further Changes to Sequestration Required Reductions

In an April 26, 2013 Electronic Announcement we informed the financial aid community that the Office of Management and Budget (OMB) had recalculated the sequester-required reductions that institutions must apply to TEACH Grant and Iraq-Afghanistan Service Grant awards for which the first disbursement is made after March 1, 2013. Specifically, the April 26 Electronic Announcement informed institutions that the reduction for TEACH Grant awards had changed from 12.6 percent to 7.1 percent, and the reduction for Iraq-Afghanistan Service Grant awards had changed from 37.8 percent to 10.0 percent.

This Electronic Announcement informs the community of a further change in the percentage reduction that applies to TEACH Grant awards for which the first disbursement is made after March 1, 2013. OMB has revised their calculations and has informed us that the percentage reduction for TEACH Grants is now 6.0 percent rather than 7.1 percent.

Note that the Iraq-Afghanistan Service Grant award reduction of 10.0 percent, as specified in the April 26, 2013 Electronic Announcement, has not been changed.

While we appreciate that these changed reduction percentage result in extra burden on institutions, it is important that our students receive all of the aid for which they are entitled. Therefore, 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. Likewise, institutions must update TEACH Grant award amounts for upcoming payment periods, to reflect the revised reduction.

Once again, we thank you for your patience and understanding.


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