On Wednesday, May 7, President Bush signed bill H.R. 5715 into law. My post on Tuesday outlined the bill's properties, but I have received some additional clarification which may affect many of you. Most importantly, the loan increases are for both Stafford Loan and Direct Lending students. The new law goes into effect for loans first disbursed on or after July 1, 2008.
I realize this may be confusing, as I know I have been confused by the legal wording, so let me break it down. Subsidized loan limits have not changed. Unsubsidized limits have changed as follows:
Freshman loan limits:
- Dependent student: borrow usual $3,500 plus an additional $2,000 in Unsubsidized loan for total of $5,500.
- Independent student: borrow usual $3,500 plus option for additional Unsubsidized loan of $4,000 plus another $2,000 Unsubsidized for a total of $9,500.
- Dependent student whose parent is denied the PLUS loan: same as the Independent student.
Sophomore loan limits:
- Dependent student: borrow usual $4,500 plus an additional $2,000 in Unsubsidized loan for total of $6,500.
- Independent student: borrow usual $4,500 plus option for
additional Unsubsidized loan of $4,000 plus another $2,000 Unsubsidized
for a total of $10,500.
- Dependent student whose parent is denied the PLUS loan: same as the Independent student.
Junior & Senior loan limits:
- Dependent student: borrow usual $5,500 plus an additional $2,000 in Unsubsidized loan for total of $7,500.
- Independent student: borrow usual $5,500 plus option for
additional Unsubsidized loan of $5,000 plus another $2,000 Unsubsidized
for a total of $12,500.
- Dependent student whose parent is denied the PLUS loan: same as the Independent student.
Remember, these are loan limits for each academic year. Your school will determine your class level (freshman, sophomore, etc.) based on their definition of class standing. Also, you may or may not qualify for the limit depending on the costs at your college.
You may also notice I haven't mentioned graduate students. The bill did not include any loan limit increases for graduate students, so limits will remain at usual $8,500 and option for additional Unsubsidized loan of $12,000. The Department of Education is still sorting through the bill to determine how students are impacted who are taking preparatory coursework or teacher certification.