Hello,
I was hoping to get some insight on something I read on my 2015-2016 SAR. My concern is with the following statement: “we have determined that you may have received a total amount of undergraduate student loans that is close to or equal to the loan limits established for the federal loan programs. Therefore, your eligibility for additional student loans may be limited.”
I am a dependent, undergraduate student who will be a Senior in the fall of 2015. I have burrowed $30,500 and I am aware that the aggregrate limit for undergrad dependent students is $31,000. Since I am so close to the limit, I guess I am concerned with being able to afford my senior year of college. I have read a few places that if I have obtained more loan money from being denied the parent PLUS loan that I could actually be eligible to have a higher aggregate limit (the independent limit).
There seems to be a lot of knowledge people on these forums, so I look appreciate any advice/insights you all have on this subject.
Yes, it seems that you read right, see this linked table directly from the source, the federal pages. The 31k limit is for dependent students. The table says that the Independent Limit of 57,5k also applies to students who parent are unable to obtain PLUS loans. So check ahead with your financial office if your parents need to apply and get denied or how it works. https://studentaid.ed.gov/types/loans/subsidized-unsubsidized#how-much
If you have received additional unsub due to Parent PLUS denials, your aggregate limit must be reviewed to determine your actual remaining eligibility - this is done by the financial aid office at your school. They will look at your borrowing & remove the additional unsub to determine your eligibility. I am going to provide a “guess” about your situation - you have borrowed $30,500 to date … I will guess you did so for freshman, sophomore and junior years … I am providing a common scenario to illustrate:
Freshman: $5500 base sub/unsub and $4000 additional unsub = $9500
Sophomore: $6500 base sub/unsub and $4000 additional unsub = $10,500
Junior: $7500 base sub/unsub and $3000 additional unsub = $10,500
The total of all the above is $30,500. However, of this amount, $11,000 is actually additional unsub due to PP denial. The base amount, which is the amount you borrowed at dependent undergrad limits, is the other $19,500. So your real remaining eligibility is $31,000 - $19,500 = $11,500. You can only borrow $7500/year, so you would be able to borrow $7500 for your senior year (and you would still have $4000 leftover). And if your parent was denied a PP loan, you would be eligible for $5000 additional unsub due to PP denial for next year.
You are borrowing a LOT of money. Can I ask what is your major and career goal?
I am asking because I know a young woman in your situation. in the end, she borrowed around $50k (now larger because it’s grown) because of Plus denials. She’s been out of school a couple of years, but she hasn’t gotten a “good paying job” and she can’t afford to make the payments.
Her degree was in early-child development and why anyone would think that it’s ok to borrow $50k for that major is crazy. At most, she makes about $12 an hour…just enough to pay rent, etc. Even with income-adjusted repayments, she hasn’t made any payments.
“… and she can’t afford to make the payments.” If her loans are federal, she CAN afford her payments. Is she on IBR or PAYE? She would have a VERY low payment if she is on one of these plans … ($62 or $94, depending on plan). Borrowers need to make the loan repayment amount the first item in their budget …
If the student has only one year left, they are likely better to borrow the allowable amount for the last year and get the degree than to walk away now with the debt and no degree, so I don’t know why that is relevant at this point in the conversation.
If her loans are federal, she CAN afford her payments. Is she on IBR or PAYE? She would have a VERY low payment if she is on one of these plans … ($62 or $94, depending on plan). Borrowers need to make the loan repayment amount the first item in their budget …
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She was offered a lower payment plan, she showed it to me. She insisted that she couldn’t even pay that because she is running in the red each month and her BF was help her make ends meet.
I agree that the loan payment should be first in the budget, but some don’t see it that way, I guess.
I sometimes feel like a dinosaur … from back in the days when people looked at these things differently. This young lady is getting a huge break in her payments, and she is looking that gift horse in the mouth. Down the road, she is going to get bitten in the rear and wish she had just paid the low payment in the first place. But of course, no one can make her pay now. I have a 2013 grad who has not bothered to begin repaying her loans, and there is no reason on earth other than the fact that she just doesn’t feel like it. She has been given all the info she needs for repayment & repayment plans - I contacted her by phone, email, and mail with guidance - I know she has a decent job, but she can always get on IBR if it doesn’t pay as well as I expect it does - yet she ignores everything. She has told me several times, “I’m on it.” Right. She is most likely going to default, and it is going to be a real problem for her in the future. It’s so frustrating.