Subsidized Usage Limit
- What if I am a "first time borrower?"
- What do the changes mean for new student borrowers?
- What if I transfer or change majors?
New regulations from the Department of Education have changed the way that eligibility is calculated for Subsidized Loans for students who are considered First Time Borrowers on or after July 1, 2013.
First time borrowers are all students who did not have an outstanding balance on any Federal Stafford Loans (Subsidized or otherwise) as of July 1, 2013. This includes students who borrowed or will borrow their first Stafford Student Loan after July 1, 2013 or any student who previously borrowed under the Stafford Student Loan Program, paid off the debt before July 1, 2013 and then took out another student loan after the July 1, 2013.
If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans. If this limit applies to you, you may not receive Direct Subsidized Loans for more than 150 percent of the published length of your program. This is called your “maximum eligibility period.” Your maximum eligibility period is based on the published length of your current program.
For example, if you are enrolled in a two-year associate degree program, the maximum period for which you can receive Direct Subsidized Loans is three years (150 percent of 2 years = 3 years).
Transferring to a different school or changing majors can impact the amount or length of time you can borrow Direct Subsidized Loans. Your maximum eligibility period is based on the length of your current program of study, your maximum eligibility period can change if you change to a program that has a different length. 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 toward your new maximum eligibility period.
Please note that certain types of enrollment may cause you to become responsible for the interest that accrues on your Direct Subsidized Loans when the U.S. Department of Education usually would have paid it.