School Certification of the Loan

When are students who previously had been mobilized to active military duty considered veterans, and therefore independent for financial-aid purposes?Students who have served on active duty who have been discharged from service — including members of the National Guard or Reserves who served on active duty in response to a presidential order in a capacity other than "training," — are considered veterans for purposes of determining Title IV dependency.

Students who served in active duty need not have served any minimum amount of time, but if they have been discharged, that discharge must be under circumstances other than "dishonorable."

Chapter two (Application and Verification Guide) of the 2003-2004 Federal Student Aid (FSA) Handbook provides detailed guidance on this issue.
If a student is enrolled in classes that are required to continue their teacher certification, should the school prorate a loan obtained for those classes?
No. In the Federal Student-Aid Handbook for 2003-2004 (volume 8, chapter 2, pages 8-9), the U.S. Department of Education provides guidance regarding the proration of loans to students enrolled in programs of study related to professional certifications.

The Common Manual was updated to clarify that proration is not required for loans certified for a student completing coursework necessary for a professional credential or certification from a state. Those changes appear in the Integrated Common Manual, subsections 6.11.A and 6.11.E.

If you have additional questions regarding this issue or any aspect of USA Funds' policy, contact USA Funds' policy advisers.
Is it always necessary for a parent to apply for a PLUS loan and be denied before a dependent student may be awarded additional unsubsidized Stafford-loan funds?
No. Financial-aid administrators may award unsubsidized Federal Stafford-loan funds if they determine that the student's parent likely will be unable to obtain a Federal PLUS loan because of exceptional circumstances, or if the student's family is otherwise unable to provide the student's expected family contribution. In these circumstances, it is not necessary for the parent to apply for a PLUS loan. Financial-aid administrators, however, must document the reason for the exception.

USA Funds^® cautions that, while the practice is not prohibited, financial-aid administrators should be careful in making decisions typically made by the lender, such as determinations of acceptable debt-to-income ratio and ability to repay. In addition, any decisions made by the financial-aid office must be administered consistently and not result in any pattern that might be construed as discriminatory.
What are the maximum loan amounts (subsidized and unsubsidized) a dependent undergraduate student can receive in the following scenario:

-The student's cost of attendance (COA) is $16,500
-EFC is $2,789; grade level is 4
-The student is not receiving any other aid
-The student has already borrowed $21,000 in subsidized funds
In this scenario the maximum subsidized amount would be $2,000. Although the student's COA - EFC - other aid = $13,711, that amount is subject to the annual and aggregate maximums. In this case, the student has already borrowed $21,000 in subsidized funds, so the eligibility is $23,000 - $21,000 = $2,000. As a dependent, the student is not eligible for any unsubsidized funds unless the student's parent is unable to obtain a PLUS loan. If the parent is unable to obtain a PLUS loan in this instance, the student would be eligible for an additional $8,500 in unsubsidized funds (COA - other aid - sub = $14,500, subject to the annual maximum of $10,500 for grade level 4 of the combined subsidized and unsubsidized loans).
A fourth-year student is eligible for $5,500 Unsubsidized Stafford Loan for the academic year 2002-2003. The student is requesting a total loan amount of $4,000, and wants it for our first term only. Can we do this?
We assume that the student's program of study is in a regular credit-hour program, and that it is your anticipation that the student will be enrolled for the full academic year. Based on these premises, you may not schedule the entire $4,000 loan for disbursement in the first term. Loan funds must be disbursed on a payment period basis (see Common Manual subsection 5.8.D. For an eligible program that offers academic terms in semesters, trimesters, or quarters, and measures progress in credit hours, the payment period is the semester, trimester, or quarter). Loans also must be disbursed in two or more essentially equal installments (Common Manual subsection 6.2.B.). Based on the information provided and the assumptions noted above, the loan in question should be disbursed in two or more equal installments based on the payment periods applicable to the school's curriculum.
A student has a consolidation loan in excess of $30,000 and applies for a loan for the new academic year. How does the school determine whether the student has exceeded applicable aggregate loan limits?
If the student would otherwise be eligible for subsidized Stafford loan funds, the financial aid administrator (FAA) should first assume the entire balance of the consolidation loan is comprised of subsidized Stafford loans. If this assumption causes the student to exceed aggregate loan limits, the FAA should obtain documentation regarding the consolidation loan's underlying loans. This information may be obtained from the student, the school's records of previous disbursements, or the National Student Loan Data System (NSLDS). The school should follow the same process if the student is otherwise eligible for unsubsidized Stafford loan funds. The school should retain records of the basis for its determinations.

Example:
An undergraduate student applies for Stafford funding and appears to be eligible for the maximum annual loan amount of $10,500, of which $5,500 may be subsidized. The student has a consolidation loan totaling $30,000. The school must assume first that the entire consolidation loan is comprised of subsidized Stafford loan funds. Since the aggregate limit for undergraduate subsidized funding is $23,000, the school must obtain documentation of the make-up of the consolidation loan. The school documents that the existing consolidation contains $17,125 in subsidized Stafford loan funds. The school may then certify the student for $5,500 in subsidized Stafford loan funds for the new academic year. The school will retain records of the underlying loans for the existing consolidation loan to substantiate its eligibility determination.
At what point can a school no longer certify loans for the entire year (fall and spring) for students who are enrolled for both semesters but who did not receive a loan or full eligibility in the fall?
The school must certify the loan application before the earlier of the end of the loan period or the date on which the student ceased at least half-time attendance. In addition, the school must receive the Student Aid Report (SAR) from the student or the Institutional Student Information Report (ISIR) from the U.S. Department of Education with an official Expected Family Contribution (EFC) calculated by the department. Basically, the school may certify a loan application for a student for the entire loan period up to the last date of the loan period or the last date of at least half-time attendance.
We have a graduate student for whom we certified both a subsidized and unsubsidized Stafford loan for the allowable amount for a graduate student for the academic period of 2001–2002. We have found that he graduated from the graduate program in December, and is enrolled in undergraduate classes for the spring semester. He has received both disbursements of both loans and received some credit from his account before this enrollment change was discovered by our office. He has reached his undergraduate aggregate loan limit. When I called the Graduate Studies Office, I was told that he was considered to be in its program. What is this student's remaining loan eligibility?
This borrower is considered an undergraduate student due to his coursework. Because he's reached his undergraduate aggregate loan limits, no additional FFELP aid should be awarded. He can receive no additional loans until he takes graduate-level courses again. See Common Manual subsection 5.2.C.