Direct Loan 150% Loan Limit

As of July 1st, 2013, any first-time borrower will only be able to obtain federal Direct Subsidized loans for a maximum of 150% of the published program length in which they are enrolled.  A first-time borrower is defined as someone who has no outstanding balance of principal or interest on a Direct Loan or an FFEL Program Loan when receiving a Direct Loan on or after July 1, 2013.

Additionally, the subsidized loans that had been borrowed up to the 150% point will lose further government subsidy and interest will begin to become the student's responsibility if they do not graduate by the 150% point (and continue to be enrolled in the same or a shorter undergraduate program). From that point forward, these subsidized loans will become unsubsidized loans and interest will begin to accrue.

Here are a few facts that you need to know:

  • Students may receive Direct Subsidized loans for no more than 150% of the length of the current academic program. For example, a student enrolled in a two-year program will have three years' worth of subsidized loan eligibility and a student enrolled in a four-year program will have six years' worth of subsidized loan eligibility.
  • Once a student reaches the 150% mark in a particular program, their future subsidized loan eligibility in that program will end. They may, however, be eligible for unsubsidized loans.
  • A student who reaches the 150% limitation will have their interest subsidy end for all outstanding subsidized loans if the student does not graduate and continues to be enrolled in the same or a shorter undergraduate program. Repayment does not begin, but like unsubsidized loans, the student (rather than the government) would become responsible for interest that accrues from this point forward.
  • To avoid loss of subsidy, first-time borrowers have increased incentive to remain within the timeframe limitations of satisfactory academic progress. An approval of an academic progress appeal will not change any eligibility determined on subsidized loans based on this 150% rule.  We recommend you meet with an Enrollment Specialist to help ensure you're enrolling in classes required to complete your degree and avoid excess withdrawals or retaking of coursework.
  • Unlike other measures in determining continued aid eligibility, this provision is not affected by the total dollar amount borrowed. Any and all periods of subsidized loan borrowing will count against the 150% time limit.
  • This policy is in addition to, and not in place of, the lifetime aggregate loan limits that are currently in place.

For more information view the FACT Sheet from the U.S. Department of Education.