industry series ©2005 texas guaranteed student loan corporation ffelp loan packaging
TRANSCRIPT
Industry Series
©2005 Texas Guaranteed Student Loan Corporation
FFELP Loan Packaging
FFELP Loan Packaging Industry Series
Course objectives
• Learn the components of the cost of attendance and basic FFELP packaging principles
• Discuss current and future Stafford annual and aggregate loan limits
• Discuss PLUS loan “limits”
• Engage in packaging examples including Stafford and PLUS loans
• Learn tips for handling overawards
Cost of attendance and
basic packaging principles
FFELP Loan Packaging Industry Series
Cost of attendance (COA) components
• Tuition and fees
• Room and board
• Books and supplies
• Transportation
• Personal/miscellaneous expenses
• Loan fees
FFELP Loan Packaging Industry Series
COA may also include allowances for:
• Dependent care expenses
• Disability related expenses
• Study-abroad expenses
• Effective July 1, 2006, a one-time cost to the student of obtaining his/her first professional credentials
FFELP Loan Packaging Industry Series
Basic packaging “formula”
Cost of attendance (COA)
― Expected Family Contribution (EFC)
― Estimated Financial Assistance (EFA)
Financial need
FFELP Loan Packaging Industry Series
Before packaging Stafford loans for undergrads
• School that participates in Pell Grant Program must determine the student’s eligibility for Pell
• If student is eligible for Pell, the amount must be included in student’s estimated financial assistance (EFA) when determining student’s Stafford loan eligibility
FFELP Loan Packaging Industry Series
Before packaging unsub Stafford loans
A school must determine a student’s eligibility for a subsidized Stafford loan
Stafford loan annual and
aggregate limits
FFELP Loan Packaging Industry Series
Base Stafford loan annual limits (undergrad)
Maximum amount that dependent undergraduate student may be awarded in Stafford loan (in sub or unsub or both):
Grade level Before 7/1/07 On/after 7/1/07
1st year $2,625 $3,500
2nd year $3,500 $4,500
3rd year $5,500 $5,500
4th year and beyond
$5,500 $5,500
FFELP Loan Packaging Industry Series
Additional unsubsidized Stafford loan annual limits (undergrad)
• For independent students and students whose parents are unable to obtain a PLUS loan
• Provides unsubsidized Stafford loan funds in addition to the Stafford base annual loan limits
– 1st year: $4,000
– 2nd year: $4,000
– 3rd year: $5,000
– 4th year and beyond: $5,000
FFELP Loan Packaging Industry Series
Important note
• At school with 2-year programs, 2nd year limits are highest that can be offered
– No matter how long it takes student to complete program
FFELP Loan Packaging Industry Series
Multiple programs
A school may not link separate, stand-alone programs of study to allow a student to qualify for a higher annual loan limit than the student would otherwise be eligible to receive
FFELP Loan Packaging Industry Series
Preparatory/certification annual limits
• For students who are:
– Taking preparatory courses to be able to enroll in an undergraduate or graduate program, or
– Taking courses to obtain a teacher certification
FFELP Loan Packaging Industry Series
Preparatory/certification annual limits
Undergrad preparatory coursework
Grad preparatory coursework
Teacher certification
Base Stafford limit
$2625 $5500 $5500
Additional unsub Stafford limit
$4000 $5000* $5000*
*These limits will increase to $7000 effective 7/1/07
FFELP Loan Packaging Industry Series
Stafford loan annual limits (grad)
Maximum amount that graduate student may be awarded in Stafford loan funds:
*No more than $8,500 of total can be subsidized
Before 7/1/07 On/after 7/1/07
Sub and unsub total* $18,500 $20,500
FFELP Loan Packaging Industry Series
Stafford loan aggregate limits (undergrad)
• Maximum that a dependent student can borrow in Stafford loan funds (sub or unsub or both) as an undergrad― $23,000
• Maximum that an independent student can borrow in Stafford loan funds as an undergrad― $46,000 (no more than $23,000 of which can be subsidized)
FFELP Loan Packaging Industry Series
Stafford loan aggregate limits (grad)
Maximum that an independent student can borrow in Stafford loan funds as a grad*― $138,500 (no more than $65,500 of which can be subsidized)
*Including any Stafford loan funds borrowed as an undergrad
FFELP Loan Packaging Industry Series
PLUS loan annual/aggregate “limits”
• PLUS loan is available to:
– Parents of dependent undergraduate students
– Graduate/professional students (effective 7/1/06)
• There is no annual or aggregate limit for PLUS loans
• PLUS loans are only limited by COA minus estimated financial assistance (i.e., any other aid student is receiving)
Basic packaging examples
FFELP Loan Packaging Industry Series
Awarding subsidized Stafford
• Student must have financial need to be awarded a subsidized Stafford loan
• Example (2nd year, dependent undergrad student):
COA = $10,000
EFC = - $4,000
Other aid = - $2,000
Need = $ 4,000
School may award $3,500 in subsidized Stafford loan
FFELP Loan Packaging Industry Series
Awarding unsubsidized Stafford
• Student does not have to have financial need to be awarded an unsubsidized Stafford loan
• Example (1st year, dependent undergrad student):
COA = $10,000
EFC = -$ 8,000
Other aid = -$ 2,000
Need = $ 0
School may award $2,625 in unsubsidized Stafford loan
FFELP Loan Packaging Industry Series
Important note
A student can borrow an unsubsidized Stafford loan to replace all or part of the EFC
FFELP Loan Packaging Industry Series
Awarding sub and unsub
COA = $20,000
EFC = -$5,000
Other aid = -$8,000
Need = $ 7,000
Example (graduate student)
School may award $12,000 in Stafford ($7,000 sub and $5,000 unsub)
FFELP Loan Packaging Industry Series
Awarding PLUS
COA = $10,000
Other aid (sub Stafford) = -$ 2,625
Unmet COA= $ 7,375
$7,375 (maximum PLUS loan that can be awarded)
FFELP Loan Packaging Industry Series
Important note
A PLUS loan borrower can borrow a PLUS loan to replace all or part of the EFC
Overawards
FFELP Loan Packaging Industry Series
Overawards• An overaward occurs when:
– A school has awarded a Stafford loan in excess of a student’s annual or aggregate loan limit
– A school has awarded a student need-based aid in excess of his or her financial need
– A school has awarded a student in excess of his or her COA
FFELP Loan Packaging Industry Series
Preventing overawards
• A school must have procedures in place to ensure that it does not overaward a student
FFELP Loan Packaging Industry Series
Resolving overawards
• An overaward may exist after a school has awarded a student if:
– The student’s EFC changes
– The student receives aid that was not previously reported to the school
FFELP Loan Packaging Industry Series
Resolving overawards
School must reduce or eliminate overaward using one of these options:
– Use unsub or PLUS to replace EFC, if not already done
– Return the full undelivered amount of loan to lender and ask lender to reissue only the portion for which borrower is eligible
– Return only the portion of the disbursement for which borrower is no longer eligible
FFELP Loan Packaging Industry Series
Overaward example
COA = $10,000
EFC = -$ 4,000
Need= $ 6,000
School awards student sub Stafford of $2,625
After awarding student, school finds out student is receiving $4,000 scholarship
FFELP Loan Packaging Industry Series
Overaward example (cont’d.)
COA = $10,000
EFC = -$ 4,000
Other aid = -$ 4,000
Need = $ 2,000
School revises aid package to $2,000 sub and $625 unsub
FFELP Loan Packaging Industry Series
Questions?
To order additional copies, or to request permission to reproduce any of the information provided, please call TG Communications at (800) 252-9743.
©2005 Texas Guaranteed Student Loan Corporation