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You Spoke, We Listened: Time Limitation on Direct Subsidized Loan Eligibility Resource

March 14, 2014

time limitation

Have you heard about the new time limit on Direct Subsidized Loan eligibility for first-time borrowers on or after July 1, 2013? It can be a little confusing at first, so we created a helpful PDF for borrowers (and for you) that outlines the details of this new regulation.

In a nutshell, due to a federal law enacted on July 6, 2012, first-time borrowers who take out Direct Subsidized Loans on or after July 1, 2013 now have a maximum number of academic years that they may borrow or be eligible for the interest subsidy of these loans. These are Federal Loans on which the government pays interest while the student is enrolled in school at least half time, while the loan is in deferment, and during certain periods of income-driven repayment. A first-time borrower is defined as someone who has no outstanding balance of principal or interest on a FFEL or Direct Loan when receiving a Direct Loan on or after July 1, 2013.

Time Limitations:

First-time borrowers may not receive Direct Subsidized Loans for more than 150% of the published length of their current educational program (called “maximum eligibility period”).

Loss of Eligibility for Additional Direct Subsidized Loans:

Once the student borrower reaches the maximum eligibility period for Direct Subsidized Loans, he or she is no longer eligible to receive additional Direct Subsidized Loans. If the student borrower enrolls after becoming ineligible for Direct Subsidized Loans, the interest on his or her new loans will not be subsidized.

To find out more information on the ‘Loss of Eligibility Circumstances’ and when the student is responsible for paying the interest on Direct Subsidized Loans, please download our new PDF, which can be found in our library of resources.

Please let us know if you have questions – we can help!

Dawn Knight, National Manager, Nelnet Partner Solutions

Dawn Knight, National Manager, Nelnet Partner Solutions

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