| AwardYear: 1997-1998 EnterChapterNo: 10 EnterChapterTitle: Federal Family Education Loan Program SectionNumber: 2 SectionTitle: Making Loans PageNumbers: 13-32 THE LOAN APPLICATION To receive a Federal Stafford Loan, a student must complete a Free Application for Federal Student Aid (FAFSA) and a loan application. A student may obtain an application from a guaranty agency, lender, or school that participates in the Federal Family Education Loan (FFEL) Program. To receive a Federal PLUS Loan, a parent must complete a PLUS Loan application. The student benefitting from the PLUS Loan must complete a portion of the application, but is not required to complete a FAFSA unless applying for additional aid under the Student Financial Assistance (SFA) programs. There is a common loan application/promissory note that the U.S. Department of Education has approved. A student must use this form to apply for a subsidized and/or unsubsidized Federal Stafford Loan and a common loan application/promissory note that a parent must use to apply for a PLUS Loan. Applications/promissory notes that a school receives may or may not have a guaranty agency's name in the upper right corner. Even if a guaranty agency's name appears in the upper right corner of the form the student uses, another guaranty agency may process the form and insure the loan. If a guaranty agency uses the common form as part of a renewal application process, borrower information and a prior lender's name and code number may be preprinted on the form. A guaranty agency may use an electronic application process. If the guarantor chooses to do so, it must require that the borrower complete a common loan application. The guaranty agency must also provide the borrower with a promissory note and notification of the borrower's rights and responsibilities. Direct any questions about the common loan application/promissory note to the state guaranty agency. If a student is unable to find a lender willing to make a Stafford Loan, he or she should contact the guaranty agency that serves his or her state of residence for assistance in finding a lender of last resort (LLR). See page 10-10 for more information about the LLR. A Stafford Loan application comprises three sections: one to be filled out by the borrower, one to be filled out by the school, and one to be filled out by the lender. A PLUS Loan application has these three sections and a section that requires the student who is benefitting from the loan to provide information. The Borrower's Portion of the Application Some of the information a borrower must provide are his or her name, address, date of birth, Social Security Number, and driver's license number, as well as two personal references. The borrower may provide a lender's name if he or she has a preference. The borrower must read and sign the promissory note. The School's Portion of the Application [[School determines eligibility]] The school must provide the student's cost of attendance (COA), Expected Family Contribution (EFC), and estimated financial assistance (EFA). The school must also determine the loan period. The EFC appears on the Student Aid Report (SAR) that the student receives after completing and submitting a FAFSA for processing. Determining a student's COA, EFA, and loan period is the financial aid administrator's responsibility. The financial aid administrator is also expected to confirm the student's dependency status and Social Security Number. THE SCHOOL, NOT THE LENDER, DETERMINES THE STUDENT'S ELIGIBILITY FOR A STAFFORD OR PLUS LOAN. (An eligible foreign school is also responsible for determining eligibility, although such a school generally contracts with a guaranty agency or a consultant for assistance.) Chapter 2 provides information the EFC and on determining a student's dependency status and COA. The Lender's Portion of the Application The lender reviews the Stafford Loan or PLUS Loan application and completes the lender portion of the loan application. A lender is prohibited from discriminating against an applicant on the basis of race, national origin, religion, sex, marital status, age, or handicapped status. However, a lender may decline to make loans to students who do not meet the lender's credit standards or to students at a particular school, or to students enrolled in a particular program of study. A lender may decline to make FFELs for less than a specified amount; for example, a lender could refuse to make a loan for less than $500. A lender may not approve a loan for more than the least of the following amounts: - the amount the borrower requests - the student's unmet financial need (in the case of a subsidized loan) - the student's COA - the borrower's maximum borrowing limit (explained later in this section) The lender must receive approval of the guaranty agency for a Stafford Loan in order for the lender to be eligible for payment of federal interest benefits. A lender or guaranty agency may not make or guarantee a Stafford Loan or PLUS Loan until it reviews its records and finds no indication that the applicant (and the student, if the loan is a PLUS) is in default on an SFA loan made for attendance at ANY school. Once guaranty agency approval is obtained, the lender will send the Stafford Loan proceeds (or the first disbursement of the proceeds) to the school's financial aid office for delivery to the student; or the lender will send the proceeds directly to the student if he or she is enrolled in a foreign school. For a PLUS, loan proceeds are sent to the school by EFT or by a check made copayable to the school and the parent borrower. See Section 3 for more information on loan disbursement. DETERMINING THE LOAN PERIOD The period of enrollment or loan period to which the application refers is the period for which the FFEL is intended. This period must coincide with one or more of a school's academic terms (such as academic year, semester, trimester, quarter or nonstandard term) for schools that use terms. Loan periods for schools that do not use terms are generally based on the length of the program or academic year. The COA, EFA, and EFC provided on the application must relate to the loan period. The MINIMUM period for which a school may certify a loan is - a single academic term (at a school that measures academic progress in credit hours and uses terms), or - the shortest of the following three periods 1) the academic year as defined by the school in accordance with the General Provisions regulations 2) the length of the student's program at the school 3) the remaining portion of the student's program that exceeds the school's academic year (at a school that measures academic progress in clock hours, or that measures academic progress in credit hours but does NOT use terms). The MAXIMUM loan period is generally the school's academic year but cannot exceed a 12-month period. [[Summer sessions overlapping award years]] If a summer school session overlaps two award years (that is, it begins before July 1 and ends after July 1), the financial aid administrator has the discretion to decide to which of the two award years the loan period will apply. This is the ONLY case in which a financial aid administrator has such discretion. If a student in a summer school session that overlaps two award years is also receiving campus-based aid (a Federal Perkins Loan, a Federal Supplemental Educational Opportunity Grant [FSEOG], or Federal Work-Study [FWS]), both the FFEL and the campus-based aid must apply to the same award year. If a student's loan is certified after the beginning of an enrollment period, the FFEL may retroactively cover the entire period of enrollment, as long as that period of enrollment does not exceed the maximum loan period allowed. For example, suppose a school's academic term begins on September 6 and runs through December 20. A student who is admitted to a program contingent on the receipt of an acceptable academic transcript from a previous school begins the academic term on September 6. The school receives the transcript on October 15. The school may certify the loan for the full period of enrollment (September 6 through December 20). If the student plans on enrolling for the subsequent term and that term is part of the same academic year as the first term, the school may certify the loan to cover the period from September 6 to the end of the second term. [[Charging tuition and fees at the start of a program longer than an academic year]] If a school charges tuition and fees to a student at the beginning of a program that is longer than an academic year, the COA for the FFEL Program should include the full amount of the tuition and fees charged in the PERIOD OF ENROLLMENT in which the loan is made. For example, suppose a school with a 1,350-clock-hour program defines its academic year as 900 clock hours and charges each student the full $3,000 in tuition and fees at the beginning of the program. An enrolling student may receive two Federal Stafford Loans during the program (provided all eligibility criteria are met) because the program exceeds one academic year. The tuition and fees component of the COA for the first Stafford Loan is $3,000; there is no tuition and fees component in the COA for the second Stafford Loan. The second Stafford Loan must be prorated because the remainder of the program (450 hours) is shorter than the school's academic year. See page 10-25 for more information on loan proration. The amount of a student's subsidized Stafford Loan depends on his or her financial need and borrowing limit. The amount of an unsubsidized Stafford Loan depends on the student's COA, EFA, and borrowing limits. See Section 1 for information on financial need. Loan limits are discussed later in this section. Chapter 2 provides detailed information on COA and EFA. The amount of a parent's PLUS Loan depends on the benefitting student's COA. See page 10- 23 for further information. CERTIFYING A LOAN APPLICATION [[Getting previous financial aid information]] During the loan application process, a financial aid administrator must request a financial aid transcript (FAT) from each eligible school a student previously attended or must use the National Student Loan Data System (NSLDS) to obtain the student's previous financial aid information. It is the financial aid administrator's responsibility to determine whether a student previously attended an eligible school and to obtain the proper information. The financial aid administrator may certify a loan application (but is not required to do so) before receipt of any or all of a student's FATs but must not deliver loan proceeds to the student until the school receives an FAT from each of the student's previous eligible schools. In the case of a PLUS Loan, the financial aid administrator must not certify the application until the school receives an FAT from each of the benefitting student's previous eligible schools. [[School refusal to certify]] A financial aid administrator may refuse to certify an otherwise eligible FFEL borrower's loan application if the reason for the refusal is documented and provided in writing to the student. Similarly, the financial aid administrator may certify a loan for an amount less than that for which the student would otherwise be eligible if reasons for doing so are documented and explained to the student in writing. Before certifying a Stafford Loan, the financial aid administrator must - certify that the loan disbursement schedule provided with the application meets the disbursement requirements for Stafford Loans (see Section 9 for more information) and - prorate Stafford Loans for programs of study that are shorter than an academic year and for programs in which the remaining period of study is less than an academic year in length. A school may not certify a Stafford Loan or PLUS Loan application until the following requirements are also met: - The school has determined the student's dependency status, enrollment status, and satisfactory academic progress. - A student (or both the student and parent in the case of a PLUS Loan) certifies that he or she is not in default on any SFA loan and does not owe a refund on any SFA grant or scholarship. - The school determines the student's Pell Grant eligibility (for Stafford Loan applicants), and if eligible, the student has applied for the grant. - The school reviews its academic and financial aid records, verifies the information that the borrower (and the student, in the case of a PLUS Loan) certified concerning previous loans or grants, and determines that the total loan or loans certified for the period of enrollment will not cause the borrower to exceed annual or aggregate loan limits. The school must also ensure that - for subsidized Stafford Loans, the loan amount or amounts will not exceed the student's financial need as determined by an approved need analysis system and - for unsubsidized Stafford Loans or PLUS loans, the loan amount or amounts will not exceed the difference between the student's COA and his or her EFA. - Conflicting information with regard to verification requirements is satisfactorily resolved. (See The Verification Guide, 1997-98.) - The school has provided loan counseling for first-time borrowers. A financial aid administrator should be aware of the responsibility incurred in certifying a loan application. If the financial aid administrator certifies a loan for an ineligible student, the school will be responsible for purchasing the loan and for reimbursing the Department for all interest and special allowance paid on behalf of the borrower. If a student delays attending school but eventually enrolls, the school may consider the student to have maintained eligibility for the loan from the first day of the enrollment period. A school may not certify a loan for more than the least of the following amounts: - the amount the borrower requests - the student's unmet financial need (in the case of a subsidized loan) - the student's COA - the borrower's maximum borrowing limit (explained later in this section) If the financial aid administrator certifies that a student is eligible for a loan larger than that to which he or she is entitled, the school must reimburse the lender for the difference between the loan amount certified and the loan amount to which the student is entitled. The school must also reimburse the Department for the excess interest and special allowance payments made on the incorrect loan amount. [[Common certification errors]] Some of the most common errors schools make are - certifying a loan for more than the amount allowed; - certifying a loan to a student not making satisfactory academic progress (see Chapter 2); - certifying a loan to a student in an ineligible program or attending an ineligible branch campus; - certifying a loan to an ineligible student, such as a foreign student on a student visa (see Chapter 2); and - certifying more than one application for the same student for the same loan period (resulting in a loan exceeding the student's need and annual loan limit). If a subsidized Stafford Loan applicant has been selected for verification, a school may refuse to certify the Stafford Loan application until verification has been completed, or the school may certify the application, if there is no information which conflicts with that provided by the applicant. A school that chooses to certify the application may not deliver the loan proceeds to the borrower until verification has been completed. After completing the school's portion of an application, a financial aid administrator must certify that the information he or she provided is correct and that the information the student and/or parent provided is accurate to the best of the financial aid administrator's knowledge. The school must keep one copy of the application on file. The student (or the school on behalf of the student) sends the other copies of the application to the lender along with the promissory note, if included. The date of loan certification is the date the school official signs the loan application and submits it to the lender--unless the school uses another means of documenting the date it submits the application to the lender. Handling Overawards An overaward is an award in excess of need and usually occurs when, after determining EFA and certifying a Stafford Loan, the financial aid administrator learns of additional financial assistance (such as a grant or scholarship) available to the student. An overaward of Stafford Loan proceeds must be promptly returned to the lender. The school must provide the lender with a written statement explaining why the funds were returned. If, after the loan has been certified but before the school receives the loan proceeds, the school becomes aware of additional financial assistance for the student that could result in an overaward, the school may request that the lender cancel or reduce the Stafford Loan. The school also has the option at this point of reducing or canceling aid over which it has control, such as institutional or campus-based aid. A $300 overaward tolerance is permitted if the student's financial aid package includes a Stafford Loan plus Federal Work-Study (FWS). If there is no FWS in the student's financial aid package, no tolerance is allowed under FFEL. See Chapter 7, Section 2 for more information on this tolerance. See Section 3 of this chapter for more information on handling overawards that occur after a school receives loan proceeds. ANNUAL LOAN LIMITS An undergraduate student who has not yet completed the first year of an undergraduate program may borrow - up to $2,625 per academic year of study for a program that is at least an academic year in length; - up to $1,750 per academic year of study for a program that is at least two-thirds of an academic year but less than a full year; - up to $875 per academic year of study for a program that is at least one-third but less than two-thirds of an academic year. A student may not receive a Stafford Loan for a program that is less than one-third of an academic year in length. A student who has completed the first year of study but has not completed the remainder of the program may borrow up to $3,500 per academic year of study for a program that is at least an academic year in length. A student who has completed the first and second years of study but has not completed the remainder of the program may borrow up to $5,500 per academic year of study for a program that is at least an academic year in length. An undergraduate student who has an associate or baccalaureate degree that is required for admission into his or her current program may borrow up to $5,500 per academic year of study for a program that is at least an academic year in length. A loan for a borrower at any level of study must be prorated, as discussed on page 10-25, when - a program is less than an academic year in length or - a program is more than an academic year and the excess portion of the program is less than an academic year in length. However, a student may not receive a Stafford Loan for a program of less than one-third of an academic year. These loan limits represent the total of all subsidized and unsubsidized Stafford Loans a dependent undergraduate student may borrow at each level of study. A dependent undergraduate student who takes out both subsidized and unsubsidized Stafford Loans must not exceed the annual and aggregate limits allowed under the Stafford Loan Program. An unsubsidized Stafford Loan amount, subject to the loan limits described above, is the difference between the borrower's COA for the loan period and the borrower's EFA (including any subsidized Stafford Loan amount he or she will receive). This example shows how to determine the amount of an unsubsidized Stafford Loan for a dependent undergraduate student. Gary, a first-year dependent student at Reid State U., applies for a Stafford Loan to attend a term beginning in September 1997. His COA is $8,000, and, based on his need, he qualifies for a subsidized Stafford Loan of $1,000. He may also apply for an unsubsidized Stafford Loan of $1,625, which is the difference between the maximum Stafford Loan allowed him ($2,625) and the amount of his subsidized Stafford Loan. (Gary's parents may borrow a PLUS Loan to cover the remainder of his COA.) Following are loan limits for unsubsidized Stafford Loans made to independent undergraduate students (or to dependent students whose parents are unable to borrow PLUS Loans due to exceptional circumstances such as adverse credit histories). THE FOLLOWING UNSUBSIDIZED STAFFORD LOAN LIMITS MAY BE ADDED TO THE BORROWER'S SUBSIDIZED STAFFORD LOAN LIMITS. - A student who has not completed the first two years of undergraduate study may borrow - up to $4,000 for a program of study at least an academic year in length; - up to $2,500 for a program at least two-thirds of an academic year but less than a full year; - up to $1,500 for a program at least one-third of an academic year but less than two-thirds of an academic year. - A student who has completed the first and second years but who has not completed the remainder of the program may borrow up to $5,000 for a program of study at least an academic year in length. The loan must be prorated for programs less than an academic year in length or for programs more than an academic year when the remaining portion of the program in excess of an academic year is less than an academic year in length. - An undergraduate student who has an associate or baccalaureate degree that is required for admission into his or her current program may borrow up to $5,000 per academic year of study for a program that is at least an academic year in length. Here is an example of how to determine the amount of an unsubsidized Stafford Loan for an independent undergraduate student. Jennifer is a first-year independent undergraduate student at Riverfront Community U. Her COA is $7,000. Jennifer qualifies for a subsidized Stafford Loan of $1,500. She may apply for an unsubsidized Stafford Loan of $5,125 ($1,125 remaining under her initial Stafford Loan limit, plus a $4,000 unsubsidized Stafford Loan). Her total loan limit for her subsidized Stafford Loan and her unsubsidized Stafford Loan is $6,625. A student's academic year level for loan limit purposes is set according to the school's standards for the time normally required to complete a given program. For example, if the school determines a program normally can be completed in two years of full-time study, a student in that program can never receive more than the second- year annual loan limit of $3,500 in any given year, no matter how long it takes the student to finish. Further, in a program of undergraduate study, the number of years a student has completed includes any prior enrollment in an eligible program of undergraduate education for which the student was awarded an associate or bachelor's degree--if the school requires the degree for admission to the program in which the student is currently enrolled at the school. Students Who Are Not Undergraduates Students enrolled in teacher certification or recertification programs are considered the same as fifth-year undergraduate students for the purpose of determining annual loan limits. See the chart on page 10- 24 for more information on annual loan limits. The subsidized loan limit for a graduate or professional student is $8,500 per academic year. A student enrolled at least half time for a single consecutive 12- month period taking coursework that the school has determined to be necessary for the student to enroll in a graduate or professional program may borrow at the fifth-year undergraduate loan level, effective for loans certified on or after January 16, 1997. (Previously, this category of students was allowed to borrow only at the first-year undergraduate loan level.) This increased limit may be applied to a loan that is certified on or after January 16, 1997 even if the loan period began before that date. For a student whose loan was certified at the previous level, his or her school can certify another loan for the difference between the fifth-year limit and the amount already borrowed. The additional unsubsidized loan limit for graduate or professional students is $10,000 per academic year. Federal PLUS Loans A PLUS Loan may not exceed the student's estimated COA minus other financial aid awarded during the period of enrollment. This is the only borrowing limit for PLUS Loans. [[Page 10-24, "Maximum Annual Loan Amounts Federal Stafford Loan Program and Federal Direct Stafford Loan Program," is currently unavailable for viewing on the SFA BBS. Please reference your paper document of download the pdf files for additional information.]] PRORATED ANNUAL LOAN LIMITS--SUBSIDIZED AND UNSUBSIDIZED STAFFORD LOANS [[Proration applies only to undergraduates]] Generally, a dependent or independent undergraduate may borrow up to the annual limit applicable to the student's year in school. However, the maximum amount an undergraduate student may borrow must be reduced, or PRORATED, in certain situations. NOTE THAT PLUS LOANS ARE NOT SUBJECT TO PRORATION. Loans must be prorated when a student is enrolled - in a program containing fewer weeks, clock hours, or credit hours than the statutory minimum academic year; or - in a program that is longer than an academic year, but the final period of study is shorter than an academic year.*1* There are two types of proration: FIXED and PROPORTIONAL. - FIXED prorated loan limits are set dollar amounts based on the length of a student's program (or final period of study) in relation to a full academic year. - PROPORTIONAL prorated loan limits are calculated amounts based on the ratio of the credit or clock hours in a final period of study to the credit or clock hours in the school's academic year. [[Program less than AY--fixed proration]] Schools use fixed proration when students are enrolled in programs containing fewer weeks, clock hours, or credit hours than the statutory minimum academic year. Chapter 3 contains extensive information about academic year requirements. Briefly, an academic year must contain AT LEAST 30 weeks of instructional time*2* AND 24 semester or trimester hours, 36 quarter hours, or 900 clock hours. To determine the length of a student's program in relation to a full academic year, schools must compare two fractions: the number of clock or credit hours in the program divided by the number of hours in the academic year, and the number of weeks of instructional time in the program divided by the number of weeks in the academic year. The lesser of these fractions determines the relation of program length to academic year length. Fixed proration example Hector, an independent student, has enrolled in a 650-clock hour, 28-week program. The school defines the academic year for the program as 900 clock hours and 30 weeks of instructional time. Because Hector's program is shorter than an academic year, his Stafford Loans must be prorated. The school compares the two fractions: [[The fixed proration example fractions on page 10-26 are currently unavailable for viewing. Please reference your paper document for additional information.]] Of the two fractions, the smaller is 650/900 (.72); the school uses .72 as the length of Hector's program when determining the prorated loan amount. The program is less than a full year but greater than 2/3 (.66) of an academic year. Therefore, Hector may borrow up to $1,750 in combined subsidized and unsubsidized Stafford Loans (see the loan limits chart on page 10-XX). Because he is an independent student, he may be eligible for an additional prorated unsubsidized Stafford Loan of up to $2,500. [[Final period of study less than AY]] Schools must prorate a student's loan if the final period of study is shorter than an academic year. A final period of study is one at the end of which a student will complete a program. At a TERM- BASED CREDIT HOUR school (where the academic year is measured in semesters, trimesters, quarters, or other terms), a final period of study is considered shorter than an academic year if the final period consists of fewer terms than the school's scheduled academic year. At a TERM-BASED CLOCK HOUR school (where the academic year is measured in semesters, trimesters, quarters, or other terms), a final period of study is considered shorter than an academic year if the final period consists of fewer terms than the school's scheduled academic year OR fewer clock hours than the minimum statutory requirements for a full academic year. Terms within the same academic year as the student's final term are considered part of the final period of study, even if separated from the final term by a term in which the student is not enrolled. Rousimoff College has an academic year that consists of three quarters: fall, winter, and spring. Laurel will be enrolling in the fall and spring quarters, but not the winter quarter, and will graduate at the end of the spring quarter. Because the fall quarter is in the same academic year as Laurel's final quarter, it is part of the final period of study, even though there is a term between the final quarter and the fall quarter in which Laurel will not enroll. Because the fall quarter is part of the final period of study, the loan Laurel receives in the fall must be prorated, just as her spring loan must be prorated. At a NONTERM school (where programs are measured only in clock or credit hours), a final period of study is considered less than an academic year if the final period consists of fewer clock or credit hours than the minimum statutory requirements for a full academic year. To prorate the loan for a program that exceeds an academic year but has a final period of study less than a full academic year in length, schools must calculate what proportion of a full academic year the final period of study represents. The loan amount is then prorated on that basis. José is an independent third-year student at Van Dam College. Van Dam has 36 quarter hours and three quarters. José needs to complete only 24 quarter hours to finish his program and enrolls in the fall and winter quarters. Because his final period of study (2 quarters) is less than an academic year (3 quarters), his Stafford Loans must be prorated. The school determines the proportion of the academic year the final period of study represents by dividing the credit hours in this period by the number in a full academic year: [[The final period example fractions on page 10-27 are currently unavailable for viewing. Please reference your paper document for additional information.]] The school then multiplies the loan limit for all third-year students ($5,500) by 24/36 to determine the maximum subsidized Stafford Loan José can receive: José can receive up to $3,667 in combined subsidized and unsubsidized Stafford Loans. Because José is an independent student, he may be eligible for an additional unsubsidized Stafford Loan. To determine the amount, Van Dam multiplies the unsubsidized limit for independent students ($5,000) by 24/36: 24/36 X $5,000 = $3,333 José may be eligible for an additional prorated unsubsidized Stafford Loan of up to $3,333. In some cases, the school will use both fixed and proportional proration to determine the loan amount for a final period of study. See the example on the next page. [[Enrollment status changes]] If a student drops or adds a course after the school has originated a prorated loan, the school MAY readjust the loan amount but is not required to do so. Of course, a student who drops courses must still be enrolled at least half time to be eligible for any loan amount. TYPE OF ACADEMIC YEAR AND FREQUENCY OF ANNUAL LOAN LIMITS There are two types of academic years--standard academic year (SAY) and borrower-based academic year (BBAY). Only term-based programs can use SAYs. Nonterm programs must use BBAYs. If a program at a term-based school contains fewer than 30 weeks of instructional time (unless granted a waiver by the Department for an academic year of less than 30 weeks), the school must use only SAYs for borrowers in that program. Standard Academic Year A SAY is a fixed period of time that generally begins and ends at the same time each calendar year (for example, beginning on the first day of the fall semester and ending on the last day of the spring semester). A SAY must meet the statutory requirements of an academic year. For a program that uses SAYs, a summer term may be part of the academic year that preceded that term (that is, it may be a "trailer"), or it may be part of the academic year that follows that term (that is, it may be a "leader"). The school can - use a strict policy that summer terms are always trailers or leaders, - determine whether a summer term is a trailer or leader on a program-by-program basis, or - determine whether a summer term is a trailer or leader on a case- by-case basis. Summer mini-sessions can be grouped together as a trailer or leader, or they can each be treated separately and assigned to different SAYs. If the summer mini-sessions are grouped together and treated as a single term, the summer COA cannot include costs for a mini- session for which the student was not enrolled. Making Loans for Standard Academic Years A student's loan period does not have to include all academic terms in an SAY. The total of all loans borrowed within an SAY cannot exceed the student's annual loan limit for his or her grade level. A student may receive more than one loan during an SAY if - after receiving the first loan, he or she has loan eligibility remaining for that SAY; - he or she progresses to a grade level with a higher annual loan limit; or - his or her dependency status from dependent to independent during the academic year. Borrower-based Academic Year A school must use a BBAY for a nonterm program. For a term program, - a school may choose to use a BBAY if the school's defined academic year meets the minimum statutory requirements of an academic year; - a school may use BBAYs for all of its students or for students enrolled in certain programs, or it may use BBAYs on a student- by-student basis; - a school may alternate BBAYs with SAYs for a student if the academic years do not overlap; - the starting date of the BBAY depends on a student's attendance and progression in his or her degree or certificate program; - the length of the BBAY must equal the number of terms in the school's defined academic year (not including any summer trailer or leader); - the number of hours or weeks in the BBAY does not have to meet the 30-week minimum academic year if the BBAY includes a summer term; - the BBAY may include terms and/or mini-sessions the student does not attend if the student could have enrolled at least half time in those terms or mini-sessions - mini-sessions (summer or otherwise) that run consecutively must be combined and treated as a single term. If a school has a choice of academic year standards for its term-based programs, it must have a written policy that explains how it applies these options when calculating loan eligibility. Making Loans for Borrower-based Academic Years For a nonterm program, a student may not receive an additional loan until he or she completes the minimum number of weeks and credit or clock hours in an academic year. For a term program, the total of all of the loans a student receives during a BBAY cannot exceed the annual loan limit for the student's grade level. A student may receive more than one loan during a BBAY if - after receiving the first loan, he or she has loan eligibility remaining for that BBAY; - he or she progresses to a grade level with a higher annual loan limit; or - his or her dependency status from dependent to independent during the academic year. AGGREGATE LOAN LIMITS The maximum outstanding TOTAL SUBSIDIZED AND UNSUBSIDIZED Stafford Loan debt allowed is - $23,000 for a dependent undergraduate student, - $46,000 for an independent undergraduate student, and - $138,000 for a graduate or professional student (including loans for undergraduate study). Note that these maximums include any amounts borrowed under the William D. Ford Federal Direct Loan Program (Direct Loans). The aggregate limit (or sum total) for both undergraduate and graduate/professional students must include the amounts a student has outstanding in subsidized and unsubsidized loans UNDER BOTH THE DIRECT LOAN AND FFEL PROGRAMS, even if the student has consolidated any of these loans under either program. A student should contact his or her consolidation loan holder to determine the makeup of the loan--that is, the amount and type of each loan consolidated--and to determine, if payment has been made, how that payment has been apportioned among the loans consolidated. See Section 8 for more information on Federal Consolidation Loans. See Chapter 11 for more information on Direct Consolidation Loans. A borrower who has reached his or her aggregate borrowing limit may not receive additional loans. Once the loans are repaid in full or in part, the borrower may apply for additional Stafford Loans. [[The chart "Total Cumulative Loan Limits for FFELs and Direct Loans" on page 10-31 is currently unavailable for viewing. Please reference your paper document for additional information.]] INCREASED LOAN LIMITS FOR HEALTH EDUCATION ASSISTANCE LOAN (HEAL) STUDENTS An increase in ANNUAL unsubsidized Stafford Loan limits is permitted for students who could have borrowed under the Health Education Assistance Loan (HEAL) Program but who are no longer eligible because they did not borrow under that program before October 1, 1995. Students in this category who are enrolled FULL TIME in schools that participate in the HEAL Program are eligible for the higher unsubsidized Stafford Loan amounts. Obversely, students who remain eligible to borrow under HEAL (students who DID receive HEALs before October 1, 1995) may NOT receive the increased Stafford Loan amounts. A school that participates in HEAL is one that made HEAL disbursements during Fiscal Year 1995 (October 1, 1994 through September 30, 1995). Schools that have withdrawn from the HEAL Program--or have simply stopped making HEALs--after FY 95 may certify unsubsidized Stafford Loans at the increased limits for any loan period that begins before July 1, 1998. At the time this Handbook was being prepared, a future "Dear Colleague" letter was being prepared on these provisions. When determining additional unsubsidized Stafford Loan limits, participating HEAL schools must use the current HEAL Program and Discipline loan limits, described in the Department of Health and Human Services Student Financial Aid Guidelines Notebook in Section 104.3.2. Note that, unlike in HEAL, no need analysis is required for the extra unsubsidized Stafford Loan amounts. Currently, the AGGREGATE unsubsidized Stafford Loan limits still apply for these health profession students. Schools will be notified if these limits change. *1* Proration must also be done in certain cases where a program is exactly one academic year long: For example, a student withdraws from a one-year program and later, in a new academic year, completes the program (either re-enrolling at the original school or enrolling at another school). In this case, the student is enrolled in a final period of study that is shorter than an academic year. *2* The Department may waive this requirement for some programs fewer than 30 weeks. |