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Loans 150 Percent

Understanding the 150% Loan Limit

On July 6, 2012 the Moving Ahead for Progress in the 21st Century Act (MAP-21) was enacted. The new provision limits a first-time borrower’s eligibility for Direct Subsidized Loans to a period not to exceed 150% of the length of the borrower’s educational program.

For a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years and not amount borrowed) that they can receive Direct Subsidized Loans. Federal Direct Subsidized Loans were permanently limited to 150% of the length of a student’s academic program. This is called the “maximum eligibility period.” The maximum eligibility period is based on the published length of the student borrower’s current program. New student borrowers will be limited to receiving subsidized loans for 3 years in a 2-year program or 6 years in a 4-year program beginning July 1, 2013. Students reaching this limitation could receive unsubsidized loans if otherwise eligible including meeting satisfactory academic progress requirements. (This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans.)

Additionally, the borrower who reaches the 150% limitation will have their interest subsidy end for all outstanding subsidized loans. Repayment does not begin, but like unsubsidized loans, the student (rather than the government) would become responsible for interest accumulation at this point.

To avoid loss of subsidy, students who are new loan borrowers after July 1, 2013 have an 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. Federal law provides on provision to appeal this rule based on extenuating circumstances.)

 

For example, a student enrolled in a four-year bachelor’s degree program, the maximum period for which they can receive Direct Subsidized Loans is six years (150% of 4 years = 6 years). If they are enrolled in a two-year associate degree program, the maximum period for which they can receive Direct Subsidized Loans is three years (150 Percent of 2 years = 3 years).

Below are several examples:

Example 1:

Student receives 5 full years of Direct Subsidized Loans while enrolled in a 4-year BA program.

Maximum Eligibility Period 6 Years
All Subsidized Usage Periods 5 Years
Remaining Eligibility Period 1 Year

Example 2:

Student receives 3 years of Direct Subsidized Loans while enrolled in a two-year program. Student then transfers to a 4-year program.

 

  After year 3 of 2-year program Upon transfer to 4-year program
Maximum Eligibility Period 3 Years 6 Years
All Subsidized Usage Periods 3 Years 3 Years
Remaining Eligibility Period 0 Years 3 Years

Example 3: Student received 6 years of Subsidized Loans while enrolled in a 4-year program. Student does not complete and enrolls for a 7th year.

Maximum Eligibility Period 6 Years
All Subsidized Usage Periods 6 Years
Remaining Eligibility Period 0 Years
Subsidy Loss Yes, enrolled with no remaining eligibility and without completing

 

Example 4: Student is enrolled in a 2-year program and received 3 years of Subsidized Loans. Student enrolls for one more semester in the same program, and then transfers to a 4-year program.

 

  After year 3 of 2-year program Upon transfer to 4-year program
Maximum Eligibility Period 3 Years 6 Years
All Subsidized Usage Periods 3 Years 3 Years
Remaining Eligibility Period 0 Years 3 Years
Subsidy Loss Yes, borrower enrolled after eligibility loss No, borrower enrolled in a longer program
  • Student regains eligibility for Subsidized Loans upon transfer.
  • Any new Subsidized Loans will have interest subsidy.
  • Prior Subsidized Loans that lost subsidy do not regain subsidy.

Example 5: Student received 5 full years of Direct Subsidized Loans while enrolled in a 4-year program. Student does not complete and then enrolls in a 2-year program.

  End of year 5 of 4-year program Upon transfer to 2-year program
Maximum Eligibility Period 6 Years 3 Years
All Subsidized Usage Periods 5 Years 5 Years
Remaining Eligibility Period 1 Year -2 Years
Subsidy Loss No, borrower has remaining eligibility Yes, transfer caused borrower to exceed max. eligibility

 

Because the maximum eligibility period is based on the length of a student’s current program of study, the maximum eligibility period can change if they change to a program that has a different length.