Federal Direct Stafford Loan
A low-interest loan for students of up to $5,500 per year for freshmen and $6,500 for sophomores. Independent students can borrow up to $4,000 more if needed. Repayment does not begin until six months after the borrower ceases to be enrolled at least half-time. If subsidized, interest is not charged while the student is enrolled at least half-time.
Subsidized student loans are limited to 150% of the length of the student's academic program for new borrowers on or after July 1, 2013. The 150% limit means that students enrolled in a two-year program will be eligible for subsidized loans for the equivalent of three years. After that time students would only be eligible for unsubsidized student loans.
Federal Direct Parent PLUS Loan
150% Time Limitation on Loan Subsidy
This legislation limits the timeframe for which you are eligible to receive the subsidy on Federal Direct student loans and it impacts students considered to be new borrowers after July 1, 2013. New borrowers include:
- Those who have never borrowed a Federal Direct student loan prior to July 1, 2013
- Those who have previously borrowed, but have a zero balance due as of July 1, 2013
This legislation limits Federal Direct Subsidized loans to 150% of the length of a student's academic program. For example, new student borrowers in a two-year program can only receive subsidized loans for three years. The length of time is measured in academic years. Students who reach this limit may be eligible for Federal Direct Unsubsidized loans if they are otherwise eligible to receive them.
Furthermore, students who reach the 150% point and have not yet completed their program will lose the subsidy on all outstanding subsidized loans. The loans do not enter repayment at this point; however, the borrower becomes responsible for paying the interest rather than the government. This limit is based on the amount of time a student is enrolled in a program and not the amount the student borrows (with some exceptions). Less than full-time enrollment status will impact the length of time a borrower is eligible for the interest subsidy. The legislation was passed in hopes of encouraging students to complete programs of study more quickly and allowances are granted when a student completes a degree/certificate within the 150% timeframe.It is important to note that this is separate from Satisfactory Academic Progress, aggregate loan limits, and the Pell grant lifetime eligibility used limits. Approval of Satisfactory Academic Progress appeals will not extend the length of time in which you will qualify for the subsidy on student loans. This is very complicated legislation. If you would like more information we encourage you to come to the HCC Financial Aid Office during our regular business hours to meet with the counselor-on-call. They can assist you in reviewing your borrowing history and explaining how this legislation will impact you. For additional information, please read Time Limitations on Direct Subsidized Loan Eligibility from the U.S. Department of Education.