The 150% Direct Subsidized Loan Limit

As part of the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Public Law 112-141) the U.S. Department of Education (ED) has added a new provision to the Direct Loan statutory requirement that limits a first-time borrower’s eligibility for Direct Subsidized Loan to a period not to exceed 150% of the length of the borrower’s educational program. The 150% Limit is reached when the Remaining Eligibility Period equals zero or less as calculated by ED. All first-time borrowers on or after July 1, 2013 are subject to this new provision. A first-time borrower is defined as any student that did not have an outstanding balance of principal and interest on a Direct Loan (or on an older FFEL Program Loan) as of July 1, 2013. This provision would also include students who may have previously paid off their outstanding student loans. The borrower’s educational program is defined as the eligible program that the student is enrolled in, and for which the student is applying for a Direct Subsidized Loan. The Department of Education will calculate the first-time borrower’s maximum eligibility period, as well as the student’s subsidized usage period. The significant of this information is to determine if the borrower has any remaining eligibility period for Direct Subsidized Loans, and if so, how much. In addition, ED will determine whether a borrower loses interest subsidy on the Direct Subsidized Loans as a result of the 150% limit. The “Subsidized Usage Limit Applies (SULA)” field has been added the electronic functionality. All schools are required to ensure that an updated entrance counseling survey is completed by each student affected by this new provision at the website: