Navigate the 150% Loan Limit Rule with these Five Key Take-A-Ways

NOVA financial aid understands that policy changes such as the 150% time limit rule regarding federal Direct Subsidized loans can be confusing for students and can cause additional counseling inquiries and work for your financial aid office. We’re here to help with key policy take-aways and resources.
As of July 1st, 2013, any first-time borrower, (which is defined as someone who has no outstanding balance on any FFELP or Direct loan when receiving a Direct loan on or after July 1, 2013), 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. Additionally, under some circumstances, the subsidized loans that had been borrowed up to the 150% point will lose further government subsidy, meaning interest will begin to become the student’s responsibility if the student does not graduate by the 150% point (and continues to be enrolled in the same or a shorter undergraduate program). From that point forward, these subsidized loans will become unsubsidized loans.
Here are five key take-aways to keep in mind regarding the 150% Rule:
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, future subsidized loan eligibility in that program will end. The student may, however, be eligible for unsubsidized loans.
A student who reaches the 150% limitation will have the 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.
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, in most instances, prorated for less than full-time enrollment.
This policy is in addition to, and not in place of, the lifetime aggregate loan limits that are currently in place.

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