Loan Certification

For all Federal Stafford and PLUS loan applications, the school must:

• confirm that the applicant meets the definition of eligible borrower (Volume 1, Chapter 6 of the 2006-07 Federal Student Aid Handbook);
• determine the student’s enrollment status and satisfactory academic progress;
• review the National Student Loan Data System (NSLDS) information for defaults or refunds owed; and
• ensure that the amount of the loan, in combination with other aid, will not exceed the student’s financial need or the annual or aggregate loan limit.

For a Federal Stafford Loan, the school must also:

• determine the student’s Federal Pell Grant eligibility;
• for an unsubsidized Federal Stafford Loan, first determine the student’s eligibility for a subsidized Stafford Loan;
• prorate loan for programs of study that are shorter than an academic year and for programs in which the remaining period of study is less than an academic year in length; and
• ensure that the loan disbursement dates meet the cash management and disbursement requirements for Federal Stafford Loans.

If your school is eligible to use the multi-year feature of the Master Promissory Note (MPN), certification must be provided for each new loan under the MPN.

Schools are no longer required to provide need analysis information to the lender. However, you must document the student’s cost of attendance, Expected Family Contribution (EFC) and estimated financial assistance in the student’s file. This information must be made available to the lender, the guarantor or the U.S. Department of Education (ED) upon request.

You may not certify a loan for more than:

• the amount the borrower requests;
• the student’s unmet financial need (subsidized Federal Stafford Loan);
• the student’s cost of attendance; or
• the borrower’s maximum borrowing limit (annual and/or aggregate loan amounts).

Schools cannot refuse to certify a loan based on a borrower's choice of  lender or guarantor. Refer to DCL ID:GEN-07-01; FP-07-04 to review the provisions on this issue. Failure to adhere could result in fines or other administrative actions against the school.