Summary: This letter provides guidance concerning annual and aggregate loan limits for Direct Stafford/Ford Loans and Direct Unsubsidized Stafford/Ford Loans made under the William D. Ford Federal Direct Loan Program and Stafford Loans made under the Federal Family Education Loan Program
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SUMMARY: This letter provides guidance concerning annual and aggregate loan limits for Direct Stafford/Ford Loans and Direct Unsubsidized Stafford/Ford Loans made under the William D. Ford Federal Direct Loan Program and Stafford Loans made under the Federal Family Education Loan Program.
The Department has received numerous inquiries concerning the calculation of annual and aggregate loan limits for the Direct Stafford/Ford Loans and Direct Unsubsidized Stafford/Ford Loans under the William D. Ford Federal Direct Loan (Direct Loan) and Stafford Loans under the Federal Family Education Loan (FFEL) Program. Throughout this letter, subsidized Direct Stafford/Ford Loans and subsidized Stafford Loans will be referred to as "Subsidized Loans," and Direct Unsubsidized Stafford/Ford Loans and Unsubsidized Stafford Loans will be referred to as "Unsubsidized Loans." This letter does not address PLUS or Consolidation Loans.
The following key points summarize the loan limit policies discussed in this letter:
Dependent undergraduate borrowers are eligible for a combined Unsubsidized and Subsidized aggregate loan amount of up to $23,000.
Independent undergraduate borrowers (or dependent undergraduate borrowers whose parents do not qualify for PLUS Loans) are eligible for a combined Subsidized and Unsubsidized aggregate loan amount of up to $46,000. No more than $23,000 of this may be in Subsidized Loans.
Graduate and professional student borrowers are eligible for a combined Subsidized and Unsubsidized aggregate loan amount of up to $138,500. No more than $65,500 of this may be in Subsidized Loans. Graduate aggregate limits include amounts received for undergraduate study.
Independent undergraduate borrowers and graduate student borrowers may continue to borrow until they reach the aggregate loan limits for Subsidized and Unsubsidized Loans, regardless of the "base" or "additional" amounts borrowed. The term "base" amount refers to the Subsidized Loan and/or Unsubsidized Loan amounts that are equal to the annual and aggregate Subsidized Loan limits applicable to undergraduate and graduate borrowers, as described in 685.203(a), 685.203(d), 682.204(a), and 682.204(b). The term "additional" Unsubsidized Loan amounts refers to the Unsubsidized Loan amounts available to independent undergraduate borrowers, dependent borrowers whose parents do not qualify for PLUS Loans, and graduate borrowers, as described in 685.203(c) and 682.204(d).
If a borrower's dependency status changes from independent to dependent or if the student's parent initially does not qualify for a PLUS Loan but then becomes eligible for PLUS, special calculations are required in order to determine the student borrower's remaining loan eligibility.
Generally, schools need not track annual and aggregate "base" and "additional" amounts separately. The only times when consideration of "base" and "additional" amounts are required is for the proration of loans for grade level 1 and grade level 2 borrowers The terms "grade level 1" and "grade level 2" in this letter refer to the academic level of borrowers who have not yet successfully completed the first or second year of an undergraduate program, respectively. Similarly, the terms "grade level 3" and "grade level 4" refer to the academic level of borrowers who have successfully completed the first and second years of an undergraduate program but have not yet successfully completed the third or fourth year of an undergraduate program. and for calculating loan eligibility for borrowers whose status changes from independent to dependent or whose parents were first ineligible for PLUS Loans and then become eligible for PLUS Loans. This letter does not discuss proration of loans as that topic is fully addressed in the SFA Handbook and in recent Title IV Update Training.
Attached is a chart for determining annual and aggregate eligibility for most borrowers. Following this chart are detailed explanations of the aggregate and annual loan limit policies outlined above, followed by examples showing the calculation of the borrower's remaining eligibility. Finally, a discussion of how to calculate eligibility for students whose dependency status changed or whose parent initially did not qualify for a PLUS Loan is included at the end of the following enclosure.
Some institutions may not have been aware of the loan limit policy guidance outlined in this letter. Therefore, schools are not required to recalculate any loan eligibility on the basis of this clarification. However, we expect that these guidelines will be used for all future eligibility determinations.
For additional guidance on calculating annual and aggregate loan limits, please refer to the SFA Handbook and Title IV Update Training for 1997-98. In addition, the Departments SFA Customer Support Inquiry Service staff is available to answer questions concerning annual and aggregate loan limits. Staff members are available Monday through Friday between the hours of 9:00 AM and 5:00 PM (Eastern Time) at 1-800-433-7327. After hours calls will be accepted by an automated voice response system. Callers leaving their name and phone number will receive a return call the next day. You may FAX an inquiry to the Customer Support Inquiry Service at (202) 260-4199 or send your questions via electronic mail to email@example.com. When sending questions by FAX or electronic mail, please include your name, the name of your institution, and your phone number.
Elizabeth M. Hicks
Deputy Assistant Secretary
Student Financial Assistance Programs