Annual Loan Limits
The annual Stafford loan limits have been increased for dependent undergraduate students (except those whose parents are unable to obtain a PLUS loan) by adding $2,000 in additional unsubsidized Stafford eligibility. Currently, this amount is set at the base subsidized/unsubsidized Stafford limit. Additional unsubsidized Stafford loan funds were not previously available to dependent undergraduate students (except those whose parents were unable to obtain a PLUS loan).
| First Year |
$3,500 |
$0 |
$2,000 |
| Second Year |
$4,500 |
$0 |
$2,000 |
| Third Year & Beyond |
$5,500 |
$0 |
$2,000 |
Q: What is the trigger for the new loan limits?
A: The new loan limits apply only to additional unsubsidized Stafford loans that meet the following conditions:
- Loan periods that include or begin on or after July
1, 2008.
- First disbursements on or after July 1, 2008.
- Note: This is a change from the previously published trigger of “loans first disbursed on or after July 1, 2008.”
Q: Can schools certify the increased additional unsubsidized funds as a new loan to be disbursed on or after July 1, 2008, or, if the loan was not scheduled for first disbursement prior to that date, increase the amount of the scheduled disbursements?
A: For 2008-2009 loans already packaged and/or certified by the school using the prior loan limits, the school can choose to take one of the following actions:
- Repackage an otherwise-eligible student with the
increased loan amounts.
- Provide notification to the student that the student may be eligible for increased unsubsidized loan amounts.
Note, however, that if the first disbursement of the previously packaged loan was disbursed to the school prior to July 1, 2008, the school must certify a new loan for the increased amount that will be first disbursed on or after July 1, 2008.
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Annual Unsubsidized Stafford Loan Limits
The annual Stafford loan limits have been increased for independent undergraduate students (and dependent students whose parents are unable to obtain a PLUS loan). This change is effective for loans first disbursed on or after July 1, 2008, with loan periods that include or begin on or after that date. Note: This is a change from the previously published trigger of “loans first disbursed on or after July 1, 2008.”
For these two groups of students those annual limits for additional unsubsidized Stafford loans have increased as follows:
- For the first two years of undergraduate study, the
annual limit increases by $2,000, to $6,000 from $4,000.
- For students who have completed two years of study, the annual loan limit increases by $2,000, to $7,000 from $5,000.
| First Year |
$3,500 |
$4,000 |
$6,000 |
| Second Year |
$4,500 |
$4,000 |
$6,000 |
| Third Year & Beyond |
$5,500 |
$4,000 |
$7,000 |
Q: Are dependent undergraduate students whose parents are unable to obtain a PLUS loan eligible for the $2,000 additional unsubsidized amount as dependent students, and for the additional $2,000 in independent unsubsidized loan eligibility?
A: No. Students are eligible only for a maximum of $2,000 additional eligibility, regardless of dependency status.
Q: Can schools certify the increased additional unsubsidized funds as a new loan to be disbursed on or after July 1, 2008, or, if the loan was not scheduled for first disbursement prior to that date, increase the amount of the scheduled disbursements?
A: For those 2008-2009 loans already packaged and/or certified by the school using the prior loan limits, the school can choose to take one of the following actions:
- Repackage an otherwise-eligible student with the
increased loan amounts.
- Provide notification to the student that the student may be eligible for increased unsubsidized loan amounts.
Q: Are students enrolled in teacher certification coursework still eligible for up to $7,000 in additional unsubsidized Stafford loans?
A: ED has confirmed that independent students enrolled in teacher certification coursework remain eligible for the $7,000 in additional unsubsidized Stafford loans.
| Preparatory Coursework for Enrollment in an Undergradaute Program |
$2,625 |
$4,000 |
$6,000 |
| Preparatory Coursework for Enrollment in an Gradaute Program |
$5,500 |
$7,000 |
$7,000 |
| Teacher Certification Coursework |
$5,500 |
$7,000 |
$7,000 |
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Parent PLUS Loans: Postponement of Repayment Based on Student’s Enrollment
For PLUS loans first disbursed on or after July 1, 2008, parents can elect to postpone repayment until six months after the day after the dependent for whom the loan was obtained ceases enrollment on at least a half-time basis.
Parents then have two repayment options:
- Enter repayment within 60 days after the loan is
fully disbursed.
- Enter repayment the day after six months following the date the student for whom the loan was borrowed ceased to carry at least one-half the normal full-time academic workload (as determined by the school).
The option to postpone repayment is loan-specific, applicable only to a parent PLUS loan first disbursed on or after July 1, 2008. There is no change for parent PLUS loans disbursed prior to July 1, 2008 — even under the same Master Promissory Note: Repayment will begin 60 days after full disbursement for those loans.
Q: What method must the parent-borrower use to indicate to the lender that the parent wants the new parent PLUS postponement status?
A: Any method is allowed, as long as the borrower receives confirmation of the election from the lender.
Q: If the student ceases enrollment but returns to school at least half time during the six-month post-enrollment period, is the postponement of repayment on the parent PLUS loan reinstated?
A: Yes. This process is consistent with Stafford loan enrollment processing.
Q: If the student ceases enrollment but does not return to school on at least a half-time basis until after the parent has entered repayment on the PLUS loan (after the six-month post-enrollment period expires), does the loan re-enter the postponement status again?
A: No. At this point the parent-borrower is in repayment and may postpone repayment only by using forbearance.
Q: Can a parent PLUS borrower continue in a postponement status while the student continues the student’s education at the graduate level, if the student is considered continuously enrolled and in an in-school status?
A: Yes.
Q: Are parent PLUS borrowers who elect to postpone repayment allowed to consolidate their loans during the postponement period?
A: Yes, per §682.201(d); however, “Borrowers should be counseled that consolidating their PLUS loans into a consolidation loan will cause them to lose the PLUS postponement period.”
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PLUS Loan Borrowers: Parents and Graduate/Professional Students
The definition of “extenuating circumstances” is broadened to temporarily allow, but not require, lenders to approve parent and Grad PLUS loans with the following credit annotations that would otherwise be considered “adverse credit”:
- The borrower is up to and including 180 days
delinquent on mortgage loan payments.
- The borrower is up to and including 180 days
delinquent on medical payments.
- Lender approval is allowed in these instances only if the borrower is not more than 89 days delinquent on the repayment of any other debt, however.
Mortgage loans are defined as extensions of credit secured for primary residence of the borrower.
This change is effective for extenuating circumstances decisions made on or after the date of enactment (May 7, 2008) for delinquencies during the period from Jan. 1, 2007, to Dec. 31, 2009.
Q: Can lenders implement this provision prior to when the Department issues regulations?
A: Yes. To serve borrowers immediately, lenders may implement this expansion without regulation.
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Exceeding Loan Limits
Q: What is the effect of the higher loan limits on borrowers who previously exceeded their loan limits?
A: A borrower who exceeds his or her annual or aggregate FFELP loan limit is ineligible to receive any additional Title IV funds until the borrower either repays the excess amount to the lender or makes satisfactory arrangements with the lender to repay the excess amount. Even then the borrower would be unable to obtain additional FFELP loan funds because the annual or aggregate loan limit has been reached. With the increased additional unsubsidized Stafford loan limits that are effective for loans first disbursed on or after July 1, 2008, for loan periods that include or begin on or after that date, such a borrower could regain eligibility for FFELP loan funds, provided the borrower had repaid — or made satisfactory arrangements to repay — the excess amount that previously was received.
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