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Subsidized Usage Limit Applies


 Script Editor

There is a new provision that limits a first-time borrower’s eligibility for Direct Subsidized Loans to a period not to exceed 150 percent of the length of the borrower’s educational program (“the 150% limit”).

  • A Subsidized Direct loan is a loan for students with financial need as determined by federal regulations. No interest is charged while you are in school at least half-time, during your grace period, and during deferment periods.

    • Under certain conditions, the provision also causes first-time borrowers who have exceeded the 150 percent limit to lose the interest subsidy on their Direct Subsidized Loans.

  • The 150% Direct Subsidized Loan Limit provision applies only to “first-time borrowers” on or after July 1, 2013:

  • The Department of Education will determine whether borrowers are “first-time borrowers” for purposes of the 150% limit.

First-Time Borrower, Example 1:

This image contains four boxes to illustrate an example of a student who is a first time borrower. The first box states student has never borrowed before. The second box states student enrolls. The third box states student receives a direct loan. The fourth box states student is a first-time borrower.

First-Time Borrower, Example 2:

This image contains five boxes to illustrate an example of a student who is a first time borrower. The first box states student received FFEL and or Direct Loans prior to July 1, 2013. The second box states student pays off all FFEL and or Direct Loans in June 2015. The third box states student enrolls in  2017. The fourth box states student receives a new direct loan in 2017. The fifth box states student is a first-time borrower.

Maximum Eligibility Period

The 150 Percent Direct LSubsidized Loan Limit provision uses a calculation that includes the borrower's "Maximum Eligibility Period."

* A borrower's Maximum Eligibility Period is a period of time that is equal to 150% of the published length of the student's academic program.

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