Federal College Student Loan Limits
The Department of Education establishes annual and aggregate student loan limits for the various federal student loan programs. Stafford student loan limits vary depending on whether you are financially dependent on a parent or guardian or an independent.
To date, the total debt a dependent, undergraduate borrower can accumulate from all Stafford college student loans (subsidized or unsubsidized) combined is $23,000. The amount for an independent undergraduate however is $46,000. The limits will also vary for each year of study, depending on the programs length and the student’s year of study. As stated, these maximum borrowing limits are for the total of both subsidized and unsubsidized college student loans
There is a new law that increases the borrowing limits for unsubsidized Stafford college student loans first disbursed on or after July 1, 2008. The annual limit for unsubsidized Stafford college student loans for undergraduate dependent students is increased by $2,000.
This same increase of $2,000 will apply to any dependent students whose parents do not qualify to borrow a PLUS loans. This increase is in addition to the additional $4,000 or $5,000 (depending on how much school the student has already completed) that dependent students are allowed to get under current rules if their parents are unable to borrowing PLUS loans. The annual college student loan limits for independent undergraduate students looking to borrow unsubsidized Stafford college student loans will also go up by $2,000.
In 2005, Congress passed a law that has reduced and eventually will eliminate Stafford college student loan origination fees. Prior to this law, the fee limits were as high as 4%. The maximum fee for FFEL Stafford college student loan was reduced to 1.5% on July 1, 2007 (for college student loans disbursed on or after that date) and are going to drop again to 1% on July 1, 2008. The fee will be eliminated completely as of July 1, 2010. Similar changes will also be made to Direct Stafford college student loan fees.
Keep in mind that lenders are required to disclose the amount and method of calculating the origination fee. In addition, you should not be charged for any costs related to processing or the handling of the application or data required to determine your eligibility as to weather you can borrow or not.
Both the Direct and FFEL college student loan programs offer PLUS loans. These college student loans are available for parents that are borrowing for the education of there dependent undergraduate student enrolled in school at least half time.
In cases where parents are divorced or separated and they both want to borrow a PLUS loan, each parent is allowed to do so and should complete a separate application form. However, the total amount borrowed by both parents cannot exceed the PLUS loan limit, which is the cost of attendance minus any other financial aid received by the student.
Graduate PLUS loans are also available for graduate and professional students. Unlike Stafford college student loans, PLUS borrowers are usually required to pass a credit check. Unless the lender or financial institution determines that extenuating circumstances exist, you will not pass the credit check if you have:
• 90 or more days delinquent on the repayment of any debt; or if
• you have into a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a federal government college student loan debt, during the previous five years from the date of the credit report.
PLUS borrowers with poor credit history may still get a college student loan if they can find someone with a better credit history to co-sign for them.
