Time (Degree completion) Limitations on Direct Subsidized Loans
Time Limitation on Direct Subsidized Loans
In June of 2012, President Obama signed into law the “Moving Ahead for Progress in the 21st Century Act” (MAP 21). This legislation permanently limits eligibility for Subsidized Stafford Loans to 150 percent of the published length of the student’s academic program. Students who reach this limitation could continue to receive Unsubsidized Stafford loans if he or she is otherwise eligible.
Additionally, once a borrower has reached the 150 percent limitation, his or her eligibility for an interest subsidy also ends for all outstanding subsidized loans that were disbursed on or after July 1, 2013. At that point, interest on those previously borrowed loans would begin to accrue and would be payable in the same manner as interest on unsubsidized loans.
These limitations will only affect students borrowing new loans on or after July 1, 2013. A first-time borrower is a borrower who has no outstanding balance of principal or interest on a Direct Loan or FFEL loan on July 1, 2013. Borrowers who had a loan balance which has been paid in full prior to receiving loans after July 1, 2013 becomes a first-time borrower.
Unlike other measures in determining continued aid eligibility, this provision is not affected by the total dollar amount borrowed and is not adjusted to accommodate part-time enrollment. Any and all periods of subsidized loan borrowing will count against the 150% time limit.
It is key for all students (but particularly those undergraduate students borrowing for the first time after July 1, 2013) to be planful in their approach to graduation. Efficient scheduling to complete your degree in a timely manner can help you reduce overall college costs, total loan debt, and the way in which interest is calculated on loans borrowed.
Please click here for more information: Is there a time limit on how long I can receive loans?