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”).
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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.
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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.
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The 150% Direct Subsidized Loan Limit provision applies only to “first-time borrowers” on or after July 1, 2013:
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The Department of Education will determine whether borrowers are “first-time borrowers” for purposes of the 150% limit.
First-Time Borrower, Example 1:
- Student has never borrowed before
- Student enrolls
- Student receives a Direct Loan
- Student is a first-time borrower
First-Time Borrower, Example 2:
- Student received FFEL/Direct Loans prior to July 1, 2013
- Student pays off all FFEL/DL in June 2015
- Student enrolls in 2017
- Student receives a new Direct Loan in 2017
- 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.
Program Length | 150 Percent | Maximum Subsidized Loan Eligibility Period |
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2-Year Associates | X 1.5 | 3.00 Years (Based on Full-Time Enrollment) |
1-Year Certificate | X 1.5 | 1.50 Years (Based on Full-Tme Enrollment) |
1-Semester Certificate Program | X 1.5 | 1 Semester (Based on Full-Time Enrollment) |