Industry Series ©2005 Texas Guaranteed Student Loan Corporation FFELP Loan Packaging.
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Transcript of Industry Series ©2005 Texas Guaranteed Student Loan Corporation FFELP Loan Packaging.
![Page 1: Industry Series ©2005 Texas Guaranteed Student Loan Corporation FFELP Loan Packaging.](https://reader035.fdocuments.us/reader035/viewer/2022062309/56649f215503460f94c3991c/html5/thumbnails/1.jpg)
Industry Series
©2005 Texas Guaranteed Student Loan Corporation
FFELP Loan Packaging
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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
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Cost of attendance and
basic packaging principles
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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
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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
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FFELP Loan Packaging Industry Series
Basic packaging “formula”
Cost of attendance (COA)
― Expected Family Contribution (EFC)
― Estimated Financial Assistance (EFA)
Financial need
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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
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FFELP Loan Packaging Industry Series
Before packaging unsub Stafford loans
A school must determine a student’s eligibility for a subsidized Stafford loan
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Stafford loan annual and
aggregate limits
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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
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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
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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
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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
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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
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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
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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
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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)
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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
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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)
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Basic packaging examples
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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
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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
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FFELP Loan Packaging Industry Series
Important note
A student can borrow an unsubsidized Stafford loan to replace all or part of the EFC
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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)
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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)
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FFELP Loan Packaging Industry Series
Important note
A PLUS loan borrower can borrow a PLUS loan to replace all or part of the EFC
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Overawards
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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
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FFELP Loan Packaging Industry Series
Preventing overawards
• A school must have procedures in place to ensure that it does not overaward a student
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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
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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
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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
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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
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FFELP Loan Packaging Industry Series
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©2005 Texas Guaranteed Student Loan Corporation