President Bush signed into law H.R. 5715 - Ensuring Continued Access to Student Loans Act of 2008, on May 8, 2008. This new legislation increases annual and aggregate Stafford loan limits and gives the U.S. Department of Education the temporary authority to purchase loans from eligible lenders.

Below are highlights of the changes this law makes to the FFEL program:

Annual Loan Limits

For loans first disbursed on or after July 1, 2008:
  • Increases by $2,000 the annual unsubsidized Stafford base limit for dependent undergraduate students;
  • Increases by $2,000 the annual additional unsubsidized loan limits for independent undergraduate and dependent undergraduate students whose parent has been denied a PLUS loan.

Aggregate Loan Limits

For loans first disbursed on or after July 1, 2008:
  • Increases the aggregate unsubsidized loan limit for undergraduate dependent students from $23,000 to $31,000 (minus subsidized borrowing).
  • Increases the aggregate unsubsidized loan limit for undergraduate independent students from $46,000 to $57,500 (minus subsidized borrowing).

Federal Parent PLUS Loan Borrowers

  • For PLUS loans first disbursed on or after July 1, 2008, borrowers may be able to postpone payments on their PLUS loan until six months after the date their child ceases to be enrolled at least half time.
  • Lenders may consider approving PLUS loans even if, during the period from January 1, 2007 through December 31, 2009, the parents are or were:
    • no more than 180 days delinquent on a primary mortgage or medical bill payments or,
    • no more than 89 days delinquent on any other debt.

Lender of Last Resort (LLR)

  • The Department will be able to designate an entire institution as eligible for LLR loans. This provision became effective on the date of enactment of the law and expires on June 30, 2009.
  • The state designated Guaranty Agency would be required to make loans to all of an institution’s eligible students and parents under the LLR program.

Department’s Authority to Purchase Loans

  • The Department is authorized to purchase from lenders FFEL loans that were disbursed on or after October 1, 2003 and before July 1, 2009.
  • Funds received from these purchases are to be used for continued participation by the lender in the Federal Student Loan program.

Direct questions regarding this guidance to the Office of Regulatory Compliance:
  • Phone: 518-473-3986
  • Toll free: 1-866-431-HESC (1-866-431-4372), press 6
  • e-Mail: Askpolicy@hesc.org.