20 USC 1078-8 - Unsubsidized Stafford loans for middle-income borrowers

U.S Code last checked for updates: Jan 18, 2025

§ 1078–8.

Unsubsidized Stafford loans for middle-income borrowers

(a)

In general

(b)

Eligible borrowers

Prior to July 1, 2010, any student meeting the requirements for student eligibility under section 1091 of this title (including graduate and professional students as defined in regulations promulgated by the Secretary) shall be entitled to borrow an unsubsidized Federal Stafford Loan for which the first disbursement is made before such date if the eligible institution at which the student has been accepted for enrollment, or at which the student is in attendance, has—

(1)

determined and documented the student’s need for the loan based on the student’s estimated cost of attendance (as determined under section 1087ll of this title) and the student’s estimated financial assistance, including a loan which qualifies for interest subsidy payments under section 1078 of this title; and

(2)

provided the lender a statement—

(A)

certifying the eligibility of the student to receive a loan under this section and the amount of the loan for which such student is eligible, in accordance with subsection (c); and

(B)

setting forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of section 1078–7 of this title.

(c)

Determination of amount of loan

(d)

Loan limits

(1)

In general

(2)

Limits for graduate, professional, and independent postbaccalaureate students

(A)

Annual limits

The maximum annual amount of loans under this section a graduate or professional student, or a student described in clause (ii), may borrow in any academic year (as defined in section 1088(a)(2) of this title) or its equivalent shall be the amount determined under paragraph (1), plus—

(i)

in the case of such a student who is a graduate or professional student attending an eligible institution, $12,000; and

(ii)

notwithstanding paragraph (4), in the case of an independent student, or a dependent student whose parents are unable to borrow under section 1078–2 of this title or the Federal Direct PLUS Loan Program, who has obtained a baccalaureate degree and who is enrolled in coursework specified in paragraph (3)(B) or (4)(B) of section 1091(b) of this title—

(I)

$7,000 for coursework necessary for enrollment in a graduate or professional program; and

(II)

$7,000 for coursework necessary for a professional credential or certification from a State required for employment as a teacher in an elementary or secondary school,

except in cases where the Secretary determines that a higher amount is warranted in order to carry out the purpose of this part with respect to students engaged in specialized training requiring exceptionally high costs of education, but the annual insurable limit per student shall not be deemed to be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any years in excess of the annual limit.

(B)

Aggregate limit

(3)

Limits for undergraduate dependent students

(A)

Annual limits

(B)

Aggregate limits

(4)

Limits for undergraduate independent students

(A)

Annual limits

The maximum annual amount of loans under this section an undergraduate independent student, or an undergraduate dependent student whose parents are unable to borrow under section 1078–2 of this title or the Federal Direct PLUS Loan Program, may borrow in any academic year (as defined in section 1088(a)(2) of this title) or its equivalent shall be the sum of the amount determined under paragraph (1), plus—

(i)

in the case of such a student attending an eligible institution who has not completed such student’s first 2 years of undergraduate study—

(I)

$6,000, if such student is enrolled in a program whose length is at least one academic year in length; or

(II)

if such student is enrolled in a program of undergraduate education which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to one academic year;

(ii)

in the case of such a student at an eligible institution who has successfully completed such first and second years but has not successfully completed the remainder of a program of undergraduate education—

(I)

$7,000; or

(II)

if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year; and

(iii)

in the case of such a student enrolled in coursework specified in—

(I)

section 1091(b)(3)(B) of this title, $6,000; or

(II)

section 1091(b)(4)(B) of this title, $7,000.

(B)

Aggregate limits

(5)

Capitalized interest

(e)

Payment of principal and interest

(1)

Commencement of repayment

(2)

Capitalization of interest

(A)

Except as provided in subparagraph (C), interest on loans made under this section for which payments of principal are not required during the in-school and grace periods or for which payments are deferred under sections 1077(a)(2)(C) and 1078(b)(1)(M) of this title shall, if agreed upon by the borrower and the lender—

(i)

be paid monthly or quarterly; or

(ii)

be added to the principal amount of the loan by the lender only—

(I)

when the loan enters repayment;

(II)

at the expiration of a grace period, in the case of a loan that qualifies for a grace period;

(III)

at the expiration of a period of deferment or forbearance; or

(IV)

when the borrower defaults.

(B)

The capitalization of interest described in subparagraph (A) shall not be deemed to exceed the annual insurable limit on account of the student.

(C)

Interest shall not accrue on a loan deferred under section 1078(b)(1)(M)(v) or 1077(a)(2)(C)(iv) of this title.

(3)

Subsidies prohibited

(4)

Applicable rates of interest

(5)

Amortization

The amount of the periodic payment and the repayment schedule for any loan made pursuant to this section shall be established by assuming an interest rate equal to the applicable rate of interest at the time the repayment of the principal amount of the loan commences. At the option of the lender, the note or other written evidence of the loan may require that—

(A)

the amount of the periodic payment will be adjusted annually; or

(B)

the period of repayment of principal will be lengthened or shortened,

in order to reflect adjustments in interest rates occurring as a consequence of section 1077a(c)(4) of this title.

(6)

Repayment period

(7)

Qualification for forbearance

(f)

Repealed. Pub. L. 105–244, title IV, § 423(f), Oct. 7, 1998, 112 Stat. 1698

(g)

Single application form and loan repayment schedule

(h)

Insurance premium

(Pub. L. 89–329, title IV, § 428H, as added Pub. L. 102–325, title IV, § 422, July 23, 1992, 106 Stat. 535; amended Pub. L. 103–66, title IV, §§ 4047(a), 4102(b), Aug. 10, 1993, 107 Stat. 363, 366; Pub. L. 103–208, § 2(c)(42)–(45), Dec. 20, 1993, 107 Stat. 2466, 2467;

cite as: 20 USC 1078-8