Over the years the Texas Higher Education Coordinating Board has provided a variety of loans to eligible students within the State at below market interest rates. This has been possible, in part, because of our ability to fund our loan programs with the proceeds of tax-exempt bonds issued by the Board in accordance with various state and federal laws.

In particular, a provision of the Internal Revenue Code imposes a requirement that will impact the required loan certification for our loans that are not federally guaranteed. This applies to the College Access Loan (CAL) Program.

When you are certifying a CAL loan application, you are certifying that the amount of the requested loan does not exceed the difference between the total cost of attendance (COA) and other forms of student assistance for which the student borrower may be eligible. The other forms of student assistance that must be considered when determining the amount of any CAL that a student borrower is eligible to receive include:

• Free sources of student aid, such as gifts, grants and scholarships, and
• The amount of any federal Perkins loan and federal Direct Stafford loan (inclusive of subsidized and unsubsidized) that a student borrower is eligible to receive. Only federal Perkins loans (to the extent that your institution has Perkins funds to award) and federal Direct Stafford loans are to be considered - not federal PLUS loans.

Our bond counsel advises that a student's federal Direct Stafford eligibility must be taken into consideration even if your institution does not package Direct loans. CAL loans may still be used to replace a student's expected family contribution.

In summary, the amount of any federal loan that a student is eligible to receive (regardless of whether the student actually accepts these loans) reduces the amount of any CAL loan that the student otherwise would be eligible to receive. We appreciate very much your cooperation and compliance with this requirement.