Instead of declaring for the 2007 NBA Draft, Lofton announced that he would return to Knoxville for his senior season. Lofton was featured on the cover of the November 21, 2007 Sports Illustrated issue, holding a basketball away from Chris Douglas-Roberts of the University of Memphis. Sports Illustrated picked Tennessee 3rd in the country and Lofton as a 1st Team All-American. On December 19, 2007, Lofton passed Allan Houston to become first on Tennessee's list for most three-point field goals made. Houston had held the record with 346 three-pointers made. On January 22, 2008, Lofton passed Pat Bradley of the University of Arkansas to capture the record for the most career three-pointers in the Southeastern Conference with 367. His final three-pointer came vs. Louisville in the Sweet 16 of the 2008 NCAA Tournament, a game which Tennessee lost 79–60. Lofton was also selected to Third Team All-America for his senior season.