Annual loan limit

The institution determines the student’s grade level from credits earned and the dependency status from the FAFSA. It then certifies a loan up to the lesser of the annual limit, the remaining aggregate limit, and the student’s cost of attendance minus other aid. The amount is split across payment periods.

Example: a first-year dependent undergraduate may borrow up to $5,500 (of which no more than $3,500 can be subsidized). A third-year independent undergraduate may borrow up to $12,500 (of which no more than $5,500 can be subsidized). The actual amount certified may be lower if need or cost of attendance is smaller.

Aggregate loan limits cap the lifetime total. Enrollment intensity can affect Pell Grant amounts but does not raise the annual Direct Loan limit above the grade-level cap. PLUS loans have no fixed annual dollar limit other than cost of attendance minus other aid.

Certifying the maximum annual amount without checking remaining aggregate eligibility. Applying graduate annual limits to an undergraduate. Forgetting to prorate the annual limit for a student in a short remaining period of study.