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Time Limitation on Direct Subsidized Loan Eligibility for First-
Time Borrowers on or after July 1, 2013
Maximum eligibility period to receive Direct Subsidized Loans
There is a limit on the maximum period of time (measured in academic years) that you can receive Direct
Subsidized Loans. In general, you may not receive Direct Subsidized Loans for more than 150% of the
published length of your program. This is called your “maximum eligibility period”. You can usually find
the published length of any program of study in your school’s catalog.
For example, if you are enrolled in a 4-year bachelor’s degree program, the maximum period
for which you can receive Direct Subsidized Loans is 6 years (150% of 4 years = 6 years). If you
are enrolled in a 2-year associate degree program, the maximum period for which you can
receive Direct Subsidized Loans is 3 years (150% of 2 years = 3 years).
Your maximum eligibility period is based on the published length of your current program. This means
that your maximum eligibility period can change if you change programs. Also, if you receive Direct
Subsidized Loans for one program and then change to another program, the Direct Subsidized Loans you
received for the earlier program will generally count against your new maximum eligibility period.
Periods that count against your maximum eligibility period
The periods of time that count against your
maximum eligibility period are periods of
enrollment (also known as “loan periods”) for
which you received Direct Subsidized Loans.
For example, if you are a full-time student
and you receive a Direct Subsidized Loan
that covers the fall and spring semesters
(a full academic year), this will count as
one year against your maximum
eligibility period.
If you receive a Direct Subsidized Loan for a period
of enrollment that is shorter than a full academic
year, the period that counts against your maximum
usage period will generally be reduced accordingly.
For example, if you are a full-time student
and you receive a Direct Subsidized Loan
that covers the fall semester but not the
spring semester, this will count as one-
half of a year against your maximum
eligibility period.
With one exception, the amount of a Direct
Subsidized Loan you receive for a period of
enrollment does not affect how much of your
maximum eligibility period you have used. That is,
even if you receive a Direct Subsidized Loan in an
amount that is less than the full annual loan limit,
that lesser amount does not reduce the amount of
your maximum eligibility period you have used. The
one exception applies if you receive the full annual
loan limit for a loan period that does not cover the
whole academic year. In that case, the loan will
count as one year against your maximum eligibility
period regardless of your enrollment status (half-
time, three-quarter time, or full-time).
Click here to see some examples that show how your
maximum eligibility period can change if you change
programs.
Click here to see an example.
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Effect of borrowing while enrolled part-time
If you receive a Direct Subsidized Loan when you are enrolled less than full-time, the period that is
counted against your maximum eligibility period will be reduced.
For example, if you are enrolled half-time and receive a Direct Subsidized Loan for a period of
enrollment that covers a full academic year, this will count as only one-half of a year against
your maximum eligibility period.
Loss of eligibility for additional Direct Subsidized Loans and becoming responsible for
paying interest on Direct Subsidized Loans
After you have received Direct Subsidized Loans
for your maximum eligibility period, you are no
longer eligible to receive additional Direct
Subsidized Loans. However, you may continue
to receive Direct Unsubsidized Loans.
In addition, if you continue to be enrolled in any
undergraduate program after you have received
Direct Subsidized Loans for your maximum
eligibility period, we will no longer (with certain
exceptions) pay the interest that accrues on
your Direct Subsidized Loans for periods when
we would normally would have done so. The
chart below provides examples of these
circumstances.
Do I become responsible for paying the interest that accrues on my Direct Subsidized Loans
because . . .
No
I am no longer eligible for Direct Subsidized Loans and I stay enrolled in my current program?
I am no longer eligible for Direct Subsidized Loans, did not graduate from my prior program, and
am enrolled in an undergraduate program that is the same length or shorter than my prior
program?
I transferred into the shorter program and lost eligibility for Direct Subsidized Loans because I have
received Direct Subsidized loans for a period that equals or exceeds my new, lower maximum
eligibility period, which is based on the length of the new program?
I was no longer eligible for Direct Subsidized Loans, did not graduate from my prior program, and
am enrolled in an undergraduate program that is longer than my prior program?
X
I lose eligibility for Direct Subsidized Loans and immediately withdraw from my program?
X
I graduated from my prior program prior to or upon meeting the 150% limit, and enroll in an
undergraduate program that is the same length or shorter than my prior program?
X
I enroll in a graduate or professional program?
X
I enroll in preparatory coursework that I am required to complete to enroll in a graduate or
professional program?
X
I enroll in a teacher certification program (where my school does not award an academic
credential)?
X
Remember, your maximum eligibility period can
change if you enroll in a different program. So, if
you received Direct Subsidized Loans for your
maximum eligibility period for one program and
then enroll in a longer program, you will not
become responsible for interest that accrues on
your Direct Subsidized Loans.
If you meet any of the conditions on the prior
page, you will become responsible for the interest
that accrues on your Direct Subsidized Loans,
from the date of your enrollment after meeting
the 150% limit, during periods when we would
have normally paid the interest for you. Below is
a chart that summarizes the periods when we
normally pay the interest on your Direct
Subsidized Loans, and an explanation and what
happens after you become responsible for the
interest.
Click here to see an example.
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During what period am I responsible for paying the interest on
my Direct Subsidized Loans . . .
Before meeting the
150% limit?
After meeting the
150% limit?
While enrolled in school at least half-time
No
Yes
During my grace period on loans first disbursed (paid out) July
1, 2013 through June 30, 2014
Yes
Yes
During my grace period on loans first disbursed (paid out) July
1, 2014 or after
No
Yes
During deferment periods
No
Yes
During certain periods of repayment under the Income-Based
Repayment or Pay As You Earn Plan
No
Yes
During forbearance periods
Yes
Yes
During all other periods of repayment
Yes
Yes
If you become responsible for the interest that
accrues on your Direct Subsidized Loans, any
interest that you do not pay will be capitalized
(added to your loan principal balance) at the
end of the grace, deferment, or other periods.
Capitalized interest increases your loan
principal, increases your monthly payment
amount under most Direct Loan repayment
plans, and causes you to pay more interest over
the life of your loan.
Your federal loan servicer will notify you if you
become responsible for paying the interest on
your Direct Subsidized Loans.
Regaining eligibility for Direct Subsidized Loans
If you become ineligible for Direct Subsidized Loans because you have received Direct Subsidized Loans
for your maximum eligibility period, you may again become eligible to receive Direct Subsidized Loans if
you enroll in a new program that is longer than your previous program.
If you regain eligibility to receive additional Direct Subsidized Loans because you enrolled a program that
is longer than your prior program and you previously became responsible for paying all of the interest
that accrues on your Direct Subsidized Loans, we will pay the interest that accrues on your new loans
during the periods described in the chart above.
Click here to see an example.
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