Remaining Period Of Study = Two Quarters Separated By A Period Of Non
McNutt Institute has an academic year that covers three quarters: fall, winter, and spring. Bob, an independent fourth-year undergraduate, will be enrolling at least half-time in the fall and spring quarters, but will not be enrolled in the winter quarter, and will graduate at the end of the spring quarter. Because the fall quarter is in the same academic year as Bobs 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 he will not enroll. McNutt Institute must award Bob separate loans for fall and spring.
Bobs final period of study is shorter than an academic year, so the annual loan limit for each loan must be prorated based on the number of hours for which Bob is enrolled in each term.
In this example, Bob will be enrolled for 12 hours in each of the two quarters . The prorated loan limit is determined separately for each term by converting the fraction based on the number of hours in each term to a decimal . Multiply this decimal by the combined Direct Subsidized Loan/Direct Unsubsidized Loan annual loan limit for an independent fourth-year undergraduate :
$12,500 x 0.33 = $4,125 combined subsidized/unsubsidized prorated annual loan limit for a single term
To determine the maximum portion of the $4,125 prorated annual loan limit that Bob may receive in subsidized loan funds for a single term, multiply the maximum subsidized annual loan limit of $5,500 by the same decimal :
Example : Remaining Period Of Study Shorter Than An Academic Year With Less Than Half
Turner College has an academic year that covers three quarters: fall, winter, and spring. Linda, a dependent fourth-year undergraduate, will be enrolling in the fall and winter quarters, but not the spring quarter, and will graduate at the end of the winter term. Linda will be enrolled for 12 quarter hours during the fall quarter, but will be enrolled for only three hours in the winter quarter. Turner defines its academic year as 36 quarter hours and 30 weeks of instructional time.
Lindas final period of study is shorter than an academic year, so the annual loan limit must be prorated. However, because Linda will be enrolled less than half-time during the winter quarter , the loan period will cover the fall quarter only, and only the 12 quarter hours for the fall term are used to determine the prorated annual loan limit.
To determine the prorated loan limit for Lindas final period of study, convert the fraction based on the hours that Linda is expected to attend in the fall quarter and the hours in the academic year to a decimal . Multiply this decimal by the combined Direct Subsidized Loan and Direct Unsubsidized Loan annual loan limit for a dependent fourth-year undergraduate :
$7,500 x 0.33 = $2,475 combined subsidized/unsubsidized prorated annual loan limit.
To determine the maximum portion of the $2,475 prorated annual loan limit that Linda may receive in subsidized loan funds, multiply the maximum subsidized annual loan limit of $5,500 by the same decimal :
Transfers & Grade Level
If youre awarding a Direct Loan to a student who is transferring from a program at another school to a program at your school that is greater than one academic year in length, you may use the loan limits for a second- year or higher undergraduate if your school classifies the student at that level based on the number of academic credits it accepts from the prior school, or based on the granting of advance standing in the new program. Note, however, that if the student already has an associate or bachelors degree and if that degree is required for entry into a program at your school, you must use the 3rd-year and beyond undergraduate loan limits for a student who transfers to that program.
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Example Of Subsidized Loan Eligibility
Lets say you are a dependent student and in your 3rd year of college. Your total cost of attending college is $10,000, which includes: tuition, fees, books, supplies, transportation, lunch, and personal expenses. Your expected family contribution determined from your FAFSA is $3000 and your total financial aid from grants and scholarships totals $2,000. You have expenses not met of $5000 . You could get a subsidized loan for the portion of expenses that were not met which is $5000. If you still need additional money to cover costs, you could receive a maximum of $500 in an unsubsidized loan. You could not exceed $2,500 in an unsubsidized loan since the maximum a 3rd year student could borrow in federal direct loans is $7,500.
$10,000 Cost of Attendance $3,000 Expected Family Contribution $2,000 Financial Aid
What Is A Direct Plus Loan
Federal Direct PLUS loan is a federal financial aid program for graduate/professional students and parents of dependent undergraduate students. Depending on the borrower, there exist two types of PLUS loans graduate and parent PLUS loans. Their interest rates, application, and repayment conditions are similar.
The main difference between these two programs is in the eligibility requirements. Besides, graduate PLUS loans are automatically deferred if the borrower is still in school. However, for parent PLUS loans, deferment should be required.
In the following sections, we will explain the different types of Direct PLUS loans.
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Health Professions Programs Eligible For
Additional $20,000 in Unsubsidized Loans for an Academic Year Covering 9 months
Additional $26,667 in Unsubsidized Loans for an Academic Year Covering 12 months
Accreditation: Council on Chiropractic Education, Commission on Accreditation
Doctoral Degree in Clinical Psychology
Accreditation: American Psychological Association, Committee on Accreditation
Masters or Doctoral Degree in Health Administration
Accreditation: Commission on Accreditation of Healthcare Management Education
Note: Students in all of the programs on this page are also eligible for a higher aggregate limit for combined subsidized/unsubsidized loans. See the Aggregate Loan Limits section later in this chapter.
Proration of annual loan limit for academic year covering 10 or 11 months: For programs with an academic year covering 10 or 11 months, the annual additional unsubsidized loan limit must be prorated. If the academic year covers 10 or 11 months, the prorated annual loan limit is determined by dividing the applicable loan limit for an academic year covering 9 months by 9, and then multiplying the result by 10 or 11.
Effect Of The Sequester On Loans
The Budget Control Act put into place an automatic federal budget cut known as the sequester. The sequester has the following effects on the Direct Loan program:
For Direct Subsidized Loans and Direct Unsubsidized Loans, when the first disbursement of the loan is made after October 1, 2020, and before October 1, 2021, the loan fee will be 1.057% of the amount of each disbursement.
For Direct PLUS Loans , when the first disbursement of the loan is made after October 1, 2020, and before October 1, 2021, the loan fee will be 4.228% of the amount of each disbursement.
Loan fee calculations that result in more than two decimal places must be truncated to two digits after the decimal point . For more information, see the .
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How Does Repayment Work
When applying for a Parent PLUS Loan, you can request a deferment while your child is in school. In this case, you wont have to start making loan payments until they leave school, graduate, or drop below half-time enrollment.
However, its important to mention that you need to request a deferment if this is what you want. Otherwise, youll be responsible for making payments as soon as the loan is fully disbursed.
Parent PLUS Loan borrowers can choose from the standard repayment plan, the graduated repayment plan , or the extended repayment plan . Generally speaking, Parent PLUS Loans arent eligible for income-driven repayment plans, but the exception is that if you consolidate the loans into a Direct Consolidation Loan, they could be eligible for the Income-Contingent Repayment plan, which limits the monthly payment to a certain percentage of your discretionary income.
If youre having trouble repaying a Parent PLUS Loan, you may be able to request a deferment or forbearance to temporarily reduce or stop your loan payments.
Transfer To A New School
If a student transfers into a clock-hour, non-term, or non-SE9W nonstandard term program at a new school and the academic year associated with the last loan the student received at the prior school overlaps the initial academic year for the program at the new school, the new school may originate an initial loan for a loan period that covers the remaining portion of the academic year that began at the prior school. The loan period for this initial loan is often called an abbreviated loan period, because it is shorter than the loan period that would otherwise be required under the normal minimum loan period requirements.
The new school may originate a loan for an abbreviated loan period regardless of whether or not the new school accepts transfer hours from the prior school. The abbreviated loan period begins with the date of the students enrollment at the new school, and ends on the calendar period ending date of the academic year that began at the prior school, without regard to the number of credit/clock-hours or weeks of instructional time that the student has completed during the abbreviated loan period. After the abbreviated loan period is completed, the student progresses to a new loan period and academic year , and a new annual loan limit.
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Federal Direct Student Loans
The table below shows the breakdown of the maximum amount you can borrow when taking out Direct Subsidized and Unsubsidized student loans. Note that the total for each year, and cumulatively, includes both subsidized and unsubsidized federal loans. If, for example, your subsidized loan total in year one as a dependent undergrad is $3,500, you are limited to $2,000 in unsubsidized loans for that year. If your subsidized total is less than $3,500, the difference between that and $5,500 can be unsubsidized loans.
The amount you can borrow each year and cumulatively as an undergrad is also affected by your parents’ eligibility to help you by taking out a Direct PLUS loan. If they are eligible, the amount you can borrow in your own name is less. If they are ineligible, due to poor credit, for example, you can borrow more. Amounts for independent undergrads also reflect lack of parent supportas do amounts for graduate and professional students, who are always considered to be independent.
The aggregate total for each class of borrower includes all unpaid loan balances for all federal student loans taken. This includes subsidized and unsubsidized FFEL loans, which are no longer available, as well as subsidized graduate level loans dispersed before July 1, 2012.
To apply for federal student loans, you’ll need to submit the Free Application for Federal Student Aid .
Bbay Where Say Contains 2 Semesters
Examples 1a through 1c illustrate the optional use of BBAY 1 for a program that is offered in an SAY consisting of two semesters, fall and spring, each 15 weeks of instructional time in length.
In example 1a, the initial fall and spring terms could be considered either an SAY or BBAY. If the student attends the summer session at the school, the aid administrator can elect to treat the summer term and the next fall as a BBAY for the student. In that case, the following spring and summer would also constitute a BBAY. The maximum loan limit for an academic year applies to each BBAY. If these were the first three years of study for a dependent student who progressed a grade level each academic year, the student would be eligible for up to the applicable annual loan limit each academic year.
A student doesnt have to attend all of the terms in a BBAY, but the BBAY cannot begin with a term that the student doesnt attend. In example 1b, the student is not enrolled in the second term of year 2.
In example 1c, if the student does not attend a term that otherwise would have been the beginning of a BBAY , then the students next BBAY cannot begin until the next term that the student attends. As with example 1a, the annual loan limit applies to each BBAY.
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How Much Student Loan Debt Can I Borrow
The federal government has a maximum student loan limit and a total limit to the amount you can borrow.
Financing higher education can be challenging. While financial aid applications are cumbersome enough, you also need to be mindful of the fact that theres a limit to the amount of student loans you can take out. Federal limits determine your eligibility for subsidized, unsubsidized, and PLUS student loans. Private lenders also cap the amount that you can borrow, but those limits are lender-specific.
Several different factors go into determining how much you can borrow each year and throughout your college education. The type of degree youre earning and your student statuswhether or not you are dependent on your parentsare used to calculate how much you can borrow.
Once weve covered the loan limits, well discuss what you can do if you find that you exceed them. There are a few options that you can pursue if you need more money. Keep in mind that though these caps are in place, youll always want to make sure that the amount that you borrow is compatible with how much money youll be making after graduation. Make sure that you can afford your monthly payment once you enter repayment. After all, these limits exist to make sure that you only borrow what you need.
So, what is the maximum student loan amount for your specific situation?
William D Ford Federal Direct Student Loan
In the Direct Loan program, the U.S. Department of Education is the lender for your student loan. There are two types of student loans in the Direct Loan program subsidized and unsubsidized. These loans are not based on your credit rating/score and do not require a credit check.
- The Direct Subsidized Loan is based on need. Interest on the Direct Subsidized Loan does not accrue while you are in school and during your grace period.
- The Direct Unsubsidized Loan is not based on need. Interest on the Direct Unsubsidized Loan does accrue once the loan is disbursed.
Loan Request Process: If you were not initially awarded a Federal Direct Student Loan and are interested in requesting one, or if you were only awarded a Subsidized loan and would like to request an Unsubsidized loan, you must complete and submit the online Federal Direct Loan Request Form.
|Students who will be offered aSubsidized loan automatically:||Students who need to submita loan request form:|
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Cost Of Attendance Caps
The Federal Direct Stafford Loan and Federal Direct PLUS Loan are subject to cost of attendance caps. The amount borrowed may not exceed the cost of attendance less other financial aid.
Most private lenders also base annual loan limits on the colleges cost of attendance.
The cost of attendance includes allowances for college costs, as determined by the college. These costs include
- Tuition and fees
- Miscellaneous/personal expenses
A student with above average expenses, special needs expenses or dependent care costs may need to appeal to the college financial aid office for an increase in the cost of attendance.
The cost of attendance cap is reduced by the amount of other financial aid received by the student to pay for their college costs. Financial aid may include grants, scholarships, tuition waivers, student employment and student loans. may reduce the eligible federal loan amounts below the legal maximum.
Subsidized loans, such as the subsidized Federal Stafford Loan, may also be limited by the students demonstrated financial need. Demonstrated financial need is the difference between the cost of attendance and the students expected family contribution , as determined by the Free Application for Federal Student Aid .
Parent Plus Loan Limits
If youre a graduate or professional student or have a parent with a good credit history, consider a PLUS loan. There arent any specific limits to the amount of money that you can borrow with a PLUS loan. This type of loan is capped at what your school lists as the cost of attendance less any other financial aid that the student receives. Parent PLUS loans come with higher interest rates, so be sure to max out your federal subsidized and unsubsidized loans first.
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I dont think these loans should be presented with the financial aid offer at all, said Amy Laitinen, director for higher education at New America. I think it speaks more to the schools desire to bring in the students than to whats best for the family. To present it as if its really a way for paying for college when theres no way for those parents to pay it back is shameful and harmful.
In 2011, the Obama administration set restrictions on who could borrow through the Plus program, imposing credit and income requirements. But an outcry from colleges caused the administration to reverse course the following year, making it even easier for parents to borrow.
Critics compare the governments loans to those given out by banks to people who couldnt afford to repay in the lead-up to the 2008 financial crisis. Unlike student loans, parent loans offer no easy option for an income-based repayment plan. If a parent defaults, the federal government can garnish wages and Social Security checks to force repayment.
Rep. Marcia Fudge, D-Ohio, introduced a bill last year that would cap Parent Plus interest rates, allow for income-based repayment plans and mandate counseling for all borrowers, but it has been stuck in committee. Biden has not announced any plans regarding the program.
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