The Idiot Guide
to
AGGREGATE LIMITS
and
OVER-BORROWING
within
Direct Lending
Sean McNally
Table of Contents
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A.1.1 Aggregate limits 2
A.1.1.1 Adjusting loans if aggregate reached in current year 3
A.1.1.2 Keeping the Cash true in making changes 4
A.1.1.3 Adjusting if aggregate reached in previous year(s) with you 5
A.1.1.4 Adjusting loans of previous closed years and elsewhere 6
A.1.1.5 Reaffirmation Agreement – Dear Colleague Advice 7
A.1.1.6 Reaffirmation application form 9
This guide an extract from Sean’s Idiot Guide which is available at
www.sean-usloans.co.uk
A.1.1 Aggregate limits
Look at page four of the SAR and check aggregates. Student may not borrow more sub/unsub than the allowed aggregate values.
There is no limit to the PLUS loans either for a year or aggregate.
If all those checks are fine then the spreadsheet is correct and we can go ahead to originate the loans and print/send the visa letter
Current Annual Limits
Undergraduates / Dependent / Independent(and dependent undergraduates whose parents are unable to obtain PLUSLoans)
First-Year / $5,500—No more than $3,500 of this amount may be in subsidized loans. / $9,500—No more than $3,500 of this amount may be in subsidized loans.
Second-Year / $6,500—No more than $4,500 of this amount may be in subsidized loans. / $10,500—No more than $4,500 of this amount may be in subsidized loans.
Third-Year and above / $7,500—No more than $5,500 of this amount may be in subsidized loans. / $12,500—No more than $5,500 of this amount may be in subsidized loans.
Aggregate Loan Limit / $31,000—No more than $23,000 of this amount may be in subsidized loans. / $57,500 for undergraduates—No more than $23,000 of this amount may be in subsidized loans.
Graduate Students
Annual Loan Limit / $20,500 (unsubsidized only)
Aggregate Loan Limit / $138,500 —No more than $65,500 of this amount may be in subsidized loans.
The graduate aggregate limit includes all federal loans received for undergraduate study.
The aggregate limit is not a lifetime borrowing limit. It is the maximum aggregate which may be outstanding at any time
¨ If some/all has been repaid, then the applicant may re-borrow back up to the limit.
¨ Consolidated (unpaid) loans must be added to the outstanding unsub outstanding.
If the aggregate limit is reached, there are no more loans of that type.
If the aggregate limit is breached, there is no more borrowing at all. This can be fixed.
To check any changes in future years, go to
http://studentaid.ed.gov/types/loans/subsidized-unsubsidized#how-much-can-i-borrow
A.1.1.1 Adjusting loans if aggregate reached in current year
Look at the CoA
Three figures should basically agree
The yellow boxes on the CoA can be adjusted and they will change the net value
If you increase the PLUS value the sheet will give a warning message. The warning is not for you, it is to stop students asking for more than they are entitled
You can play in the yellow boxes to reduce the sub/unsub as the aggregate limit allows and increase the PLUS.
The final borrowing cannot be more than the student said they want overall and cannot be more than the CoA
MAKE ABSOLUTELY SURE THAT THERE IS NO CASH DIFFERENCE BETWEEN WHEN YOU STARTED AND WHEN YOU FINISHED
If. you don’t ensure cash balances, then you will spend dats and days fiddling to get it right again.
A.1.1.2 Keeping the Cash true in making changes
A.1.1.3 Adjusting if aggregate reached in previous year(s) with you
In COD, go into the School tab at the top of the screen,
Enter the school code and Direct Lonss
Look at the menu on the left
Select deadline extension
Request the old year be opened and select an appropriate reason.
In a few days, email will be sent to your normal email address telling you when and for how long the year will be open again.
When it is re-opened, follow the previous procedure.
MAKE ABSOLUTELY SURE THAT THERE IS NO CASH DIFFERENCE BETWEEN WHEN YOU STARTED AND WHEN YOU FINISHED
If. you don’t ensure cash balances, then you will spend dats and days fiddling to get it right again.
A.1.1.4 Adjusting loans of previous closed years and elsewhere
There are only two choices
¨ Repayment by the student to bring down the aggregate to within the limit
§ The student must do this by dealing directly with their servicer
¨ Making satisfactory repayment arrangements
§ Again this is directly between student and servicer
All you seek is a letter from the servicer stating that the student is in good standing
Here’s the rules from the FSA handbook – straight copy – not my words.
Repayment of the excess loan amount
If a student who has inadvertently overborrowed wishes to regain
Title IV eligibility by repaying the excess loan amount, the student must
contact the applicable servicer and comply with the servicer’s repayment
instructions. The school may assist the student in identifying and
contacting the servicer, but the student, not the school, must make the
payment of the excess loan funds in accordance with the servicer’s instructions.
Once the student has repaid the excess loan amount in full, the
servicer will send the student confirmation that the excess loan amount
has been repaid. The student or servicer must provide a copy of the repayment
confirmation to the school. The inadvertent overborrowing is
considered to have been resolved as of the date the servicer received the
borrower’s full payment of the excess loan amount
Satisfactory repayment arrangements
A student who has inadvertently overborrowed may regain Title IV
eligibility by making satisfactory repayment arrangements acceptable to
the servicer of the loan. The satisfactory repayment arrangement requirement
can be met if the student agrees, in writing, to repay the excess
amount according to the terms and conditions of the promissory note
that supported the loan. This is called “reaffirmation.” The reaffirmation
process includes the following five steps:
1. Either the school or the student contacts the servicer and
explains that the student has inadvertently overborrowed and
wishes to reaffirm the debt.
2. The servicer sends the student a reaffirmation agreement.
3. The student reads, signs, and returns to the servicer the
reaffirmation agreement.
4. The servicer sends the student confirmation that the
reaffirmation agreement has been accepted. The student or
servicer must provide a copy of the reaffirmation confirmation
to the school.
FSA Handbook 3-128
Once you have documented that the student has either repaid the
excess loan amount or has made satisfactory arrangements with the loan
holder to repay the excess amount, you may award additional aid.
A.1.1.5 Reaffirmation Agreement – Dear Colleague Advice
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Publication Date: October 19, 2015
DCL ID: / GEN-15-20Subject: Direct Loan and FFEL Program Reaffirmation Agreement
Summary: The letter provides information about a new form for use by lenders and loan servicers in the Direct Loan and Federal Family Education Loan programs.
Note: The attachment to this DCL was replaced with a version that more easily allows loan holders to add their address and phone number to Section 5 of the form.
Dear Colleague:
The Office of Management and Budget (OMB) has approved the attached Reaffirmation Agreement under OMB Control Number 1845-0133 with an expiration date of 6/30/2018. Loan holders, servicers, and schools are encouraged to begin using the attached form immediately and may not provide any other reaffirmation agreement to borrowers after March 30, 2016.
In Dear Colleague Letter GEN-13-02, we described the following process by which a borrower who inadvertently exceeded an annual or aggregate loan limit could regain Title IV eligibility by reaffirming the excess Direct Loan or FFEL program loan amount.
Step 1 – Either the institution or the student contacts the servicer and explains that the student has inadvertently overborrowed and wishes to reaffirm the debt.
Step 2 – The servicer sends the student the reaffirmation agreement provided in this letter.
Step 3 – The student reads, signs, and returns to the servicer the reaffirmation agreement.
Step 4 – The servicer sends the student confirmation that the reaffirmation agreement has been accepted. The student or servicer provides a copy of the reaffirmation confirmation to the institution.
Step 5 – The inadvertent overborrowing is considered to have been resolved as of the date the servicer receives the student’s signed reaffirmation agreement.
The process described in DCL GEN-13-02 and summarized above continues to apply. However, the reaffirmation agreement referenced in this process above will now be the new, standardized Reaffirmation Agreement that is attached to this letter.
Note that the student must have the school at which the student is seeking Title IV aid complete Section 3 of the form. Section 3 asks the school to identify which loan or loans caused the overborrowing and the amount of the overborrowing.
Printing Instructions
To improve accessibility for visually impaired borrowers, the form is provided only in PDF format as an attachment to this letter. Loan holders and guaranty agencies are responsible for ensuring that the form in use is identical to the form approved by OMB. No changes may be made to the form except as expressly discussed below.
The loan holder or servicer must print the attached form with black ink on white paper. The typeface, point size, and general presentation of the form may not be changed from the version approved by OMB. Loan holders and servicers may use any blank spaces at the top, bottom, or sides of the form for bar coding or other lender- or servicer-specific information. In addition, loan holders and servicers may pre-populate their contact and submission information in the section of the form designed for that purpose.
Sincerely,
Jeff Baker, Director
Policy Liaison and Implementation
Federal Student Aid
Attachments/Enclosures:
Reaffirmation Agreement (OMB No. 1845-0133) in PDF Format, 1.4MB, 3 Pages
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A copy of this pdf – not brilliant print as it’s screenshots from pdf – is on the next pages
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A.1.1.6 Reaffirmation application form
9