Lenders
Frequently Asked Questions - Borrower Eligibility
A student obtains a Stafford loan while completing an undergraduate program in the fall semester. The student enrolls in a graduate program to begin in the following spring term which is part of the same academic year. How much of a new loan can the school certify in the spring?
The school may certify or originate a loan for the spring in an amount that does not exceed the remaining balance of the student’s annual loan limit for the academic year at the loan level associated with the new program.For example, if the student received a prorated subsidized loan in the fall for $2750, they would be eligible for up to $5750 in subsidized loan funds in the spring ($8500 graduate annual limit minus $2750 received as an undergraduate in the fall).
For further discussion please refer to the Federal Student Aid Handbook, Volume 3, Chapter 6, “Stafford/PLUS Loan Periods and Amount”.
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Before I borrow a student loan to attend a trade school in New York, how can I find out more information about the school other than what the school itself provides?
These types of schools, also known as proprietary schools, which offer certificate or diploma programs to learn a trade, are required by law to be licensed by the State and overseen by the New York State Education Department (SED). This assures that the educational programs being offered meet certain measurable standards.In addition, students receive benefits and protections authorized and approved by the State which can not be provided by unlicensed schools, such as; approved admission requirements and enrollment agreements, authorized directors and instructors, approved curriculum, determined refund policies and tuition protection and reimbursement provisions.
Please be aware that an individual is not eligible to receive a Stafford loan to attend a proprietary school in New York unless they are enrolled at a State licensed school.
To find out if a particular school is licensed, or to see if complaints have been filed against a school, contact SED’s Bureau of Proprietary School Supervision at highered.nysed.gov/bpss or by calling (212)643-4760 in New York City, or (518)474-3969 in Albany,NY.
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A dependent student wants to apply for a FFEL loan at their college, however, the student’s parent(s) indicate they will not complete a FAFSA. May the Financial Aid Officer (FAO) offer the student an unsubsidized loan?
The Higher Education Opportunity Act (HEOA) of 2008 allows an FAO to use professional judgment and offer a dependent student an unsubsidized loan if the FAO verifies that the parent(s) has ended financial support to the student and refuses to file a FAFSA. The verification can be provided by a written, dated statement from the parent(s), or documentation from a third party, such as a teacher, counselor, clergy or court. Self-certification by the student is not sufficient.Be advised that financial support includes not only payment by the parent(s) of educational costs, but also cash and non-cash support such as room and/or board.
The student is still required to establish loan eligibility by completing and submitting a FAFSA that includes the required student information.
The maximum annual unsubsidized loan amount that the dependent student can receive is the same available to all dependent students (base and unsubsidized) and not the higher additional unsubsidized amounts available to independent students or dependent students whose parent(s) cannot obtain a PLUS loan.
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If a student is separately enrolled and meets eligibility requirements at more than one school, may the student receive FFEL loans from multiple schools for the same loan period?
Yes. The schools that the student is attending must work together to ensure that the student does not exceed annual loan limits and that the schools do not duplicate non-institutional costs, such as room and board, in the student’s cost of attendance.For additional information, see the 2008 Common Manual, Chapter 5, Section 5.15.
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If a student indicates on their application for Federal Student Aid (FAFSA) that they have received a high school diploma or GED, is a school required to obtain a copy of the document as confirmation of the student’s claim?
No. If a student self-certifies on their FAFSA that they have received a high school diploma or GED a school is not required to request a copy of the document.Top
A defaulted Stafford loan was paid in full through a Direct Consolidation Loan. The borrower has included the consolidation loan in a bankruptcy petition. Is the borrower eligible to receive federal aid?
A borrower who includes a “non-defaulted” federal student loan in an active bankruptcy claim is eligible for aid if they have no loans in default.Even though the borrower’s Stafford loan was in default status at one time, the default was cured through inclusion in the consolidation loan.
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I have a part-time student who is also enrolled as a full-time, fourth year student at another school. The other school has certified a $4,000 subsidized loan for the upcoming academic year and the student already has $18,125 in subsidized Stafford loans outstanding. How much in subsidized loan money can I certify for the same academic year?
The total amount of subsidized loan funds the student can receive for enrollment at both schools cannot exceed the student’s highest applicable annual Stafford loan limit for the academic year.In this case, the annual limit would be based on the student’s enrollment as a fourth year student at the other school, i.e. $5,500. In addition, ESCB has to be sure that the student does not exceed the aggregate base limit of $23,000. This means the student, prior to the upcoming academic year, has remaining subsidized eligibility of $4,875 ($23,000 – $18,125). Since the other school has already certified a $4,000 subsidized loan for the upcoming year, the student would only be eligible for a subsidized loan of $875 at ESCB.
It should be mentioned that if a student is independent they may be eligible to apply for an additional unsubsidized loan, as well.
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An undergraduate student is certified for the full annual loan amount using a Borrower Based Academic Year (BBAY) of Summer/Fall. When the student returns to school the following Spring and is eligible for another full annual loan amount, may that entire amount be disbursed in the Spring term? Also, when is the next term following Spring that the student may apply for a new annual loan limit?
Yes, after the Summer/Fall BBAY, the student may receive a full annual loan amount in the Spring. Since the school’s BBAY consists of two terms, (in this case it would be Spring/Summer), a subsequent full annual loan amount may not be certified until the following Fall term.Top
Can a student who is not enrolled in a degree or certificate program receive a Stafford Loan?
Yes. A student taking preparatory courses necessary for enrollment in a eligible degree or certificate program may be eligible for a period of 12 consecutive months from the start of the loan period. Also, certain students enrolled in courses required for teacher certification may be eligible.Top
If a borrower had a defaulted loan and was subsequently approved for RETA or Rehabilitation, or paid the loan in full, can the borrower have the period of loan on the FFELP loan application backdated before the defaulted loan was paid in full or approved
A borrower who has a defaulted FFELP loan can reestablish eligibility to receive a FFELP loan if the loan is paid in full, or approved under RETA, or if the loan is rehabilitated. The borrower will regain loan eligibility for the academic year in which the borrower satisfies the payment.Top
How does a borrower with a loan in default become eligible for additional financial aid?
Borrowers whose loans are in default may become eligible to apply for additional financial aid if they pay six consecutive, agreed upon, voluntary, on-time payments. In addition, the borrower may establish eligibility for additional financial aid if they pay their defaulted loan in full, or establish eligibility through the consolidation or loan rehabilitation programs.Top
If a borrower's loan has been rehabilitated through the Rehabilitation Program, is the borrower required to repay the loan in accordance with the ten-year repayment rule?
Yes, the ten-year repayment plan remains in effect. The ten-year repayment period excludes periods of deferments, if still eligible, forbearance, or when borrowers are making reasonable and affordable payments (less than the regular monthly payment) under a forbearance agreement. New borrowers (approved on or after October 1, 1998) may qualify for an extended repayment plan of 25 years if they have a balance which is greater than $30,000.Top