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Trends and Issues

Shoptalk Online 501, April 28, 2009

Trends and Issues

Policy potpourri

Q.: Can a school refuse to award student loans (federal or nonfederal loans) for summer sessions?

A.: A school may not have a policy of refusing to award federal student loans or refusing to certify a student's full eligibility during a term, including the summer term. The 2008-09 Federal Student Aid Handbook, page 4-16, explains:

"On a case-by-case basis, you may refuse to certify/originate the loan for a borrower. Similarly, you may certify/originate a loan for an amount less than the borrower's maximum eligibility. However, you must ensure that these decisions are made on a case-by-case basis, and do not constitute a pattern or practice that denies access to borrowers because of race, sex, color, income, religion, national origin, age, handicapped status or selection of a particular lender or guarantor. Also note that your school cannot engage in a practice of certifying Stafford loans only in the amount needed to cover the school charges, or to limit unsubsidized Stafford borrowing by independent students.

When you make a decision not to certify/originate a loan or to reduce the amount of the loan, you must document the reasons and provide the explanation to the student in writing."

Federal regulations do not address the issue of refusal to certify non-federal loan applications, but we would encourage the school, in keeping with the spirit of federal loan rules, to make such determinations on a case-by-case basis. If borrowing a non-federal loan would permit the student to complete his or her studies in a more expeditious manner, and the student has exhausted all other financial aid options, such a loan may be the most appropriate choice.

Do you have a question?
If you have a question that needs an answer, feel free to Ask TG™. Ask TG is TG's online query tool for borrowers, schools, and lenders. It includes a database of frequently asked questions about financial aid, student loan processing, and TG's products and services. To submit a question to Ask TG, visit tgslc.custhelp.com.