FFELP Loan Packaging

The Guarantor of ChoiceSM

Current as of March 2006

© 2006 Texas Guaranteed Student Loan Corporation

To order additional copies, or to request permission to reproduce any of the information provided,

please call TG Communications at (800) 252-9743.

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 FFELP

packaging principles

Cost of attendance components

  • Tuition and fees
  • Room and board
  • Books and supplies
  • Transportation
  • Personal/miscellaneous expenses
  • Loan fees

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

Basic packaging “formula”

Cost of attendance (COA)

― Expected Family Contribution (EFC)

― Estimated Financial Assistance (EFA)

Financial need

Before packaging Stafford loans

for undergrads

•School that participates in Pell GrantProgram

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

Before packaging unsub Stafford loans

A school must determine a student’s eligibility

for a subsidized Stafford loan


Stafford loan annual and

aggregate limits

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

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

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

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

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

Undergrad prep course
work / Grad prep course
work / Teacher cert
Base Stafford limit / $2625 / $5500 / $5500
Additional unsub Stafford limit / $4000 / $5000* / $5000*

*These limits will increase to $7000 effective 7/1/07

Stafford annual loan limits (grad)

Maximum amount that graduate student may

be awarded in Stafford loan funds:

Before 7/1/07 / On/after 7/1/07
Sub and unsub total* / $18,500 / $20,500

*No more than $8,500 of total can be subsidized

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)

Stafford loan aggregate limits (grad)

Maximum that a 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

PLUS loan annual/aggregate “limits”

  • PLUS loan is available to
  • Parents of dependent undergrad students
  • Grad/prof students (effective 7/1/06)
  • No annual or aggregate limit for PLUS loans
  • PLUS loans are only limited by COA minus EFA

Basic packaging examples

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 subStafford loan

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 unsubStafford loan

Important note

A student can borrow an unsubsidized Stafford

loan to replace all or part of the EFC

Awarding sub and unsub

Example (grad student)

COA = $20,000

EFC = -$5,000

Other aid = -$8,000

Need = $7,000

School may award $12,000 in Stafford

($7,000 sub and $5,000 unsub)

Awarding PLUS

COA = $10,000

Other aid (sub Stafford) = -$2,625

Unmet COA= $7,375

$7,375 (maximum PLUS loan that

can be awarded)

Important note

A PLUS loan borrower can borrow a PLUS loan

to replace all or part of the EFC

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

Preventing overawards

A school must have procedures in place

to ensure that it does not overaward a student

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

A 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

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

COA = $10,000

EFC = -$4,000

Other aid = -$4,000

Need= $2,000

School revises aid package to

$2,000 sub and $625 unsub