Pop Quiz – When Would the Student Progress to the Next Grade Level?


If a student is a sophomore at the start of the fall term and completes a module course that advances him to junior status half way through the fall term, can his loan eligibility for fall be updated to the junior grade level or will he not be eligible for junior loan amounts until spring?


The increase must be done on a term basis, so in this case, the student's additional loan eligibility would be processed for the spring, as technically, at least for the first part of fall, the student was still a sophomore. Making an adjustment any earlier, would cause confusion in COD, since loans are processed by term or academic year.

Guidance found in the 2020-21 FSA Handbook, p. 3-140 states:  "There are two options for awarding an additional loan amount when a student progresses to a grade level with a higher annual loan limit during an academic year:

1. Originate a new loan at the new grade level for the applicable amount (the difference between the new loan limit and the amount of the first loan). The loan period for the new loan must correspond to the term(s) during which the student qualifies for the higher loan limit. You could also choose to cancel any pending disbursements of the first loan and originate a new loan for an amount equal to the canceled disbursements of the first loan plus the additional amount for which the student is eligible due to the grade level change.

2. Adjust the amount of the current loan. Change the grade level in the loan record and increase the amount of the existing loan to the new amount. With either option, the student’s remaining loan eligibility must be calculated using only the costs and estimated financial assistance for the term(s) during which the student qualifies for the higher loan limit.

As a reminder, a student can progress to a higher grade level during an academic year only in a program with standard terms or SE9W nonstandard terms."

You can find more information about Grade Level Progression in the Student Aid Reference Desk.


Publication Date: 3/23/2022

Carlos P | 3/23/2022 12:44:41 PM

I have not encountered this situation but I don't see where the guidance mentioned limits the new loan certification to the beginning of the next term. It just says that the advance takes place "during the academic year." Why is the certification at the higher grade level not valid based on the grade level at the time of certification, i.e. after the advance to new grade level? Is it certain that COD would not accept the new loan with the higher grade level? I don't see anything within the loan record that would cause "confusion" by COD.

Peter G | 3/23/2022 12:39:33 PM

There's an imprecision in this scenario stemming from the bias (particularly common in the east) that defaults term to semester.

While it's both obvious and not of great import in this particular question, that bias does infect NASFAA/ED/Congress/media viewpoint in other ways that are more substantial.

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