Frequently Asked Question: Triggering Events for Increased Annual Loan Limits

I’ve read that the U.S. Department of Education changed the way that schools can certify the new, higher loan amounts that are effective in July 2007. But I still don’t understand how they apply. Can you clarify which loans and/or borrowers are eligible for the new, increased loan amount?

According to federal regulations 34 CFR 682.204(a) and (d), effective July 1, 2007, Stafford loans to first-year, dependent undergraduate students may be made at a maximum of $3,500. For second-year, dependent students, the maximum annual loan amount increases to $4,500. Keep in mind that the annual loan amount is the sum of the subsidized and unsubsidized Stafford funds delivered to the student in each academic year; that sum may not exceed the new limits.

Stafford-loan limits for first- or second-year, independent, undergraduate students also will change. Independent borrowers may receive subsidized and unsubsidized Stafford loans whose combined amount does not exceed $7,500 in the first academic year, and $8,500 for the second academic year. The subsidized portion of these loans cannot exceed $3,500 for first-year students and $4,500 for second-year students.

For students enrolled in preparatory course work prior to entering a graduate program, and for teacher-preparation and certification course work, the additional unsubsidized Stafford-loan limit increases to $7,000. The additional unsubsidized Stafford-loan limit for graduate and professional students increases to $12,000.

The Department has noted that the school may certify Stafford loans for these new loan amounts provided that both of the following parameters apply:

• The loan is made for a loan period that includes July 1, 2007, or that begins after that date.
• The loan is first disbursed on or after July 1, 2007.

If the school certifies a loan for a loan period that includes July 1, 2007, but has a first disbursement date prior to July 1, 2007, then on or after July 1 the school may certify a new loan up to the applicable new annual maximum loan limit.

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