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1 [1] (November 25, 2024)

handle is hein.crs/goverka0001 and id is 1 raw text is: Congressionol Research Service Informing the Iegisl9tive debate since 1914 0 November 25, 2024 Direct Loan Program Student Loans: Loan Types and Limits The U.S. Department of Education (ED) estimates it will make about $135 billion in new loans through the William D. Ford Federal Direct Loan (Direct Loan) program-the primary federal student loan program-to approximately 14 million borrowers in FY2025. Outstanding Direct Loan program debt currently totals $1.4 trillion. The program comprises four loan types, each with differing borrower eligibility criteria and characteristics. Individuals may borrow these loans up to annual and aggregate limits, which vary by loan type and borrower characteristics. For a detailed description of these topics, see CRS Report R45931, Federal Student Loans Made Through the William D. Ford Federal Direct Loan Program: Terms and Conditionsfor Borrowers. Dfrect Loan Types and Borrower Elgblity The Higher Education Act (HEA) authorizes four types of loans under the Direct Loan program: Subsidized Loans, Unsubsidized Loans, PLUS Loans, and Consolidation Loans. Aside from basic eligibility criteria that apply to all Direct Loans (e.g., citizenship status), additional eligibility criteria such as program level and borrower need apply to individual loan types (Table 1). Table I. Direct Loan Program Loan Types and Select Borrower Eligibility Criteria Adverse Credit Need- History Loan Type Borrower Type Based Check Subsidized Undergraduate / X students Unsubsidized Undergraduate and X X graduate students PLUS Graduate students or X / parents of dependent undergraduate students Consolidation Has at least one X X outstanding qualifying federal student loan Source: HEA §§427, 428, 428B, 428C, 428H, and 455. Only Subsidized Loans are need-based; that is, to be eligible for Subsidized Loans a borrower must show that their available financial resources (e.g., funds expected to be paid by the student and their family-referred to as the Student Aid Index-and other financial aid such as Pell Grants and scholarships) do not cover their school's cost of attendance (e.g., tuition, books). With the exception of PLUS Loans, individuals may borrow Direct Loans regardless of whether they are creditworthy. To borrow PLUS Loans, an applicant must not have an adverse credit history. If they do, they may not borrow a PLUS Loan unless they either obtain an endorser or demonstrate that extenuating circumstances related to their credit history exist. Consolidation Loans enable individuals with at least one qualifying federal student loan to borrow a new loan and use the proceeds to pay off their existing federal student loan obligations. This is a form of debt refinancing. Loan Limks Amounts that may be borrowed in Direct Loans are subject to annual and aggregate borrowing limits, federal need analysis, and packaging procedures (i.e., the process of awarding student aid based on federal rules). Table 2 shows current annual and aggregate Direct Loan borrowing limits. It also shows average cumulative amounts borrowed to degree completion for select degree types in award year 2019-2020 (the most recent data available). Table 2. Annual and Aggregate Direct Loan Limits and Average Cumulative Amounts Borrowed by Select Degree Types in AY2019-2020 Borrower Average Type and Amount Program Annual Aggregate Borrowedb Levela Limit Limit (degree type) Undergraduate Students Total Subsidizedc and Unsubsidized Loans-Dependent Studentsd | st year 2nd year 3rd year and up $5,500 $6,500 $7,500 $31,000 $21,100 (bachelor's) Total Subsidizedc and Unsubsidized Loans-Independent Studentsd st year 2nd year 3rd year and up $9,500 $10,500 $12,500 $57,500 $30,700 (bachelor's) Graduate and Professional Students Unsubsidized Loans, in general PLUS Loans, in general $20,500 $138,500e $58,600 (master's) COA-EFAf Not limited $162,600 (professional)

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