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Subsidized Loan Borrowing Limitations

As of July 1, 2013, a first-time Federal Subsidized Student Loan borrower is no longer eligible for the Subsidized Student Loan program if he or she exceeds 150% of the published length necessary to graduate within an undergraduate degree program. 
In addition, a borrower reaching the 150% limit becomes ineligible for the interest subsidy benefits on all Federal Subsidized Loans disbursed to the borrower on or after July 1, 2013. 


Congress wants to encourage students to obtain undergraduate degrees within a reasonable time frame. Students who change majors multiple times or, drop classes excessively or retake classes excessively are most likely to be affected by Public Law 121-141. 


Congress will no longer provide interest rate deferments for students taking an exceptional amount of time to obtain an undergraduate degree. The interest rate expense is now passed to the student in such cases. 


Based upon available information from the U.S. Department of Education, the interpretation of the 150% rule is actual credit hours completed versus credit hours attempted. If different information becomes available, this web site will be updated. 


Questions and Answers


I previously borrowed a subsidized loan prior to July 1, 2013. Does this rule apply to me?
No. This rule is in effect for new (first-time) Subsidized student loan borrowers who borrow on or after July 1, 2013. Students who previously borrowed a Subsidized student loan prior to July 1, 2013 are not impacted by this policy. 


Will I receive less federal student loan money if I am affected by this?
It depends. What you would have previously received in the Subsidized student loan program, you may borrow in the Unsubsidized loan program. This is assuming you have not reached your lifetime Federal student loan borrowing limits. 


What does 150% of the published length necessary to graduate for a degree program mean in terms of actual credit hours completed?
For example, undergraduate degree programs at Salem require 36 credits for completion. 36 credits X 150% = 54 maximum credits can be taken before the 150% rule is invoked. 


Can I appeal the 150% rule if I have extenuating circumstances?
No. Federal law provides no provisions to appeal this rule.