March 5, 2009
Focus on HEOA: Unsubsidized Stafford Loans for Dependent Students
Over the past several months, OGSLP’s Online News highlighted various provisions contained in the Higher Education Opportunity Act (HEOA). This month, we’re focusing on the provision that relates to unsubsidized Stafford loans for dependent students.
HEOA permits a school to offer an unsubsidized Stafford loan to a dependent student without parental completion of the Free Application for Federal Student Aid (FAFSA) if the school verifies that the student’s parent(s) does not provide financial support and refuses to file the FAFSA. Providing financial support includes not only payment by the parent(s) of educational costs, but also providing other cash and non-cash support to the student such as room and/or board.
Dear Colleague Letter (DCL) GEN-08-12/FP-08-10 (pages 79-82) clarifies this new authority given to financial aid administrators. This provision is effective beginning with a loan for any period that includes or begins on or after Aug. 14, 2008. Additional information for implementation of this provision is summarized below.
The student must complete and submit a FAFSA that includes all of the required student information and certifications.
- For the 2008-2009 FAFSA processing year, a student must mail a paper FAFSA to the Department of Education’s (ED) Processing Center or submit a paper FAFSA to a school that transmits FAFSA data to ED using the Electronic Data Exchange (EDE).
- For the 2009-2010 processing year, ED is considering alternatives to the paper FAFSA and EDE submission process.
- Upon receipt of the rejected Institutional Student Information Record (ISIR), and provided that the student is otherwise eligible, the financial aid administrator may collect the documentation and determine whether to award the student an unsubsidized Stafford loan.
Verification and Documentation
The financial aid administrator must verify that the parent(s) does not provide financial support for the student and refuses to complete the parental sections of the FAFSA.
- This requirement can be met by obtaining a signed and dated statement from one of the student’s parents specifically indicating that the parent(s):
- Is no longer providing financial support for the student, including the date the financial support ended.
- Will not provide financial support in the future.
- Refuses to complete the parental section of the FAFSA.
- If the student informs the financial aid administrator that his or her parent(s) will not provide the required verification statement, documentation from a third party (e.g. teacher, counselor, clergy, court) describing the student’s relationship with his or her parents must be obtained by the financial aid administrator.
- The financial aid administrator may, but is not required to, determine how the student intends to financially support himself or herself without parental support.
The maximum annual unsubsidized loan amount a dependent student may receive is the “base” annual loan limit for the student’s grade level plus the supplemental unsubsidized amount of $2,000 added to annual loan limits for dependent students by the Ensuring Continued Access to Student Loans Act (ECASLA). As outlined in ECASLA, the student does not receive the additional unsubsidized Stafford loan amounts that are available to independent undergraduate students and dependent students whose parents are willing but unable to borrow under the PLUS loan program.
If the financial aid administrator decides not to award the student the unsubsidized Stafford loan, the student must provide a correction to the FAFSA record by submitting the required parental information and signatures before any Title IV aid can be awarded. The financial aid administrator’s decision is final; students can’t appeal to ED.
For more information about the HEOA provisions related to dependency status, contact OGSLP’s Policy, Compliance, and Training department at 405.234.4432 or email@example.com. We’re here to help!