Additional Federal Direct Stafford Unsubsidized Loan Limits

During the 2008-09 academic year, an estimated 8.5 million borrowers will receive approximately $72 billion in federal student loans to help meet educational expenses at colleges and universities.  In response to concerns regarding increasing cost and the availability of student loans for the upcoming school year, Congress recently passed and the President signed into law the “Ensuring Continued Access to Student Loans Act of 2008” (ECASLA).  A central feature of this legislation increases the annual maximum that an undergraduate student may borrow through the unsubsidized version of the Federal Direct Stafford Loan Program as follows.

The impact of the new loan limits is based upon your year in college and your dependency status.  Freshmen who originally had a Stafford Loan limit of $3,500 will now be eligible for $2,000 in additional unsubsidized loan funds for a total of $5,500.  Sophomores who had a former loan limit of $4,500 will now be eligible for a total of $6,500 and juniors and seniors will see their loan limit increase from $5,500 to a total of $7,500.  Independent undergraduates and dependent undergraduates whose parent has been denied a PLUS Loan will see their eligibility increase to the amounts reflected on the chart above.

There are several important factors to consider prior to making the decision to borrow these additional loan funds.  As a general rule, you should never borrow more than you actually need.  The increased loan limits only apply to the unsubsidized version of the Direct Stafford Loan Program which carries a fixed interest rate of 6.8% which is higher than the interest rate on a subsidized Federal Direct Stafford Loan (fixed at 6.0%) , a Federal Perkins Loan (fixed at 5.0%), or on the Loyola Student Loan (fixed at 5.0%).   Additionally, interest on unsubsidized Direct Stafford Loans begins accruing while you are still enrolled. The interest is not deferred until the completion of your undergraduate degree as is the case on the other federal or institutional need-based loans. 

Borrowing additional unsubsidized Direct Stafford Loan funds will not impact the other need-based aid that you have already been awarded, however it may reduce the total amount that your parents are eligible to borrow through the Federal PLUS Loan Program and it may reduce the amount that you are eligible to borrow through a private alternative education loan program.  However, the interest rate on this unsubsidized loan is lower than the interest rate on a Federal Direct PLUS Loan (6.8% versus 7.9%) and typically will be much lower than the interest rate on the vast majority of the alternative education loans available through private lenders.

If you decide that you wish to borrow all or a portion of the additional unsubsidized Direct Stafford Loan funds, email your request to financialaid@loyola.edu. In your email request, please indicate that you wish to borrow additional unsubsidized Direct Stafford Loan funds.  Include the full amount that you wish to borrow and provide your name and your Student ID number or Social Security Number. If you have already signed a Federal Direct Stafford Loan Master Promissory Note, it will not be necessary for you to complete a new promissory note.  Loyola will use your request to process your loan and the funds will be credited in two equal disbursements on your student account.

Please contact the Office of Financial Aid if you have any questions concerning the new unsubsidized Federal Direct Stafford Loan limits. 

Phone:  410-617-2576 or 800-221-9107
Fax:  410-617-5149
Email:  financialaid@loyola.edu