2006 Texas Guaranteed Student Loan Corporation

FFELP Loan Packaging

www.tgslc.org The Guarantor of ChoiceSM Current as of March 2006

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 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

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 $5,500 $5,500 and beyond

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 o 1st year: $4,000 o 2nd year: $4,000 o 3rd year: $5,000 o 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 Grad Teacher prep prep cert course course work work Base $2625 $5500 $5500 Stafford limit Additional $4000 $5000* $5000* unsub Stafford limit *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 On/after 7/1/07 7/1/07

Sub and $18,500 $20,500 unsub total* *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 o Parents of dependent undergrad students o 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 sub Stafford 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 unsub Stafford 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