After I Pay Back Student Subsidized Loan Can I Borrow Again
New borrowers taking out federal Direct subsidized loans between July 1, 2013 and July one, 2021 are bailiwick to the 150% Straight Subsidized Loan Limit, which limits the amount of fourth dimension a student is eligible to infringe subsidized loans to 150% of their published program length.
You may accept been notified that you lost your subsidy on some or all of your loans, or you lot may accept just heard well-nigh this subsidy limit and are looking for more than data.
Who Is Affected?
New borrowers in an undergraduate programme who take out a new loan between sure timeframes are subject to the 150% subsidy limit. A new borrower is defined as a borrower with no outstanding residuum on a federal Direct loan or Federal Family Instruction Loan Program (FFELP) loan on July 1, 2013 or on the appointment they first borrow a Straight loan between July one, 2013 and July 1, 2021.
For example, each of these students is considered a new borrower for purposes of this subsidy limit.
- A new educatee starting college and borrowing a loan for the first fourth dimension between July one, 2013 and July 1, 2021.
- A tertiary-year student who did not borrow whatsoever Direct loans for the first 2 years, taking out their first loan betwixt July 1, 2013 and July one, 2021.
- A student who returns to school between July 1, 2013 and July 1, 2021, who paid off their Direct loans in full before starting and borrowing a new loan for their new programme.
Which Loans Are Affected?
Simply Direct subsidized loans are affected by the subsidy limit.
Direct Stafford loans bachelor to undergraduate students are either subsidized or unsubsidized. The divergence betwixt the ii types of loans is who pays the involvement in sure situations.
Direct loans accumulate (i.e., build upwardly) interest. Interest is the cost of borrowing money and is charged every bit a percentage of the outstanding remainder of the loan. At certain times, the authorities pays the interest for you on subsidized loans.
Unsubsidized
Loans
Subsidized
Loans
- Unsubsidized Loans – You, the student loan borrower, are responsible for interest that accrues at all times, including while y'all're in schoolhouse.
- Subsidized Loans – The government may pay your interest during certain periods, such as when yous're in schoolhouse or in deferment. This do good is chosen your interest subsidy.
When Is the Limit Reached?
If you are a new borrower as defined above, one time you lot take out your offset subsidized loan, y'all tin continue to take out subsidized loans for 150% of your published program length. This means that the bodily time limit on your borrowing of subsidized loans varies based on the length of your program. If you lot don't know how long your program is, talk to your school for more than information.
Some examples of common programme lengths and their subsidy limits:
-
a four-year bachelor'southward degree student can accept out subsidized loans for
six-year subsidy limit
-
a 2-year associate caste student can take out subsidized loans for
3-year subsidy limit
-
a 1-yr document degree student tin take out subsidized loans for
1.5-yr subsidy limit
One time you achieve the subsidy limit for your program, you lose your subsidy on your existing loans if:
- You do not graduate, and
- You continue your enrollment in the same undergraduate program, or a program of equal or shorter length.
Keep in listen that if yous change your major or transfer to a new school, your limit may modify as well. If this happens, the subsidized loans you received in your previous program commonly count confronting your new maximum eligibility period.
Your subsidized loan usage is calculated by your enrollment status.
Full-time
Student
Half-time
Pupil
- A full-fourth dimension student taking out a subsidized loan for a full academic year has used one year of eligibility.
- A half-time student taking out a subsidized loan for a full academic year has used half a year of eligibility.
Only periods for which you receive subsidized loans count confronting this limit. If y'all're enrolled total time for four years but just have out subsidized loans for three years, you have but used three years of your eligibility.
In what situations do I lose the subsidy on my existing Straight subsidized loans?
-
when I achieve the subsidy limit and stay enrolled in my program.
-
when I reach the subsidy limit, didn't graduate, and transfer to an undergraduate program that's the same length or shorter than my prior program.
-
when I transfer into a shorter programme and lose eligibility for Direct subsidized loans considering I already received them for a menstruum that is equal to or more than my new, lower, maximum eligibility catamenia.
-
when I reach the subsidy limit, didn't graduate from my prior program, and transfer to a longer plan.
-
when I graduate from my program before or at the time I reached the subsidy limit, and enroll in another undergraduate program.
Anna is in a iv-yr bachelor's degree program. She attends school full fourth dimension, and takes out subsidized loans each year for half dozen years. When she enrolls for her seventh year, she loses eligibility for additional subsidized loans and becomes responsible for interest that accrues on her existing subsidized loans later the date she lost the subsidy.
Joe is attention a university full time to get a four-year caste, and takes out subsidized loans each year. After 3 years in his programme, he transfers to a two-year program at some other school. When he enrolls in his new program, he loses eligibility for boosted subsidized loans and becomes responsible for interest accruing on his existing subsidized loans moving forward. This happens because his subsidy limit went from six years in his previous program to three years in his new two-year program.
Sam is in a four-yr available's degree program. He attends school full time for ii years, taking out subsidized loans both years. After completing the kickoff two years, he takes a intermission for 5 years. When he returns to school, he completes his degree in two years. While information technology took him nine agenda years to complete school, he did not reach the subsidy limit because he was just really enrolled in school for a full of 4 years.
What Happens When My Subsidy Is Lost?
If y'all reach the subsidy limit, yous'll become a letter of the alphabet from your servicer notifying yous that y'all take lost your subsidy. Just what does it mean to lose the subsidy benefit?
- You lot aren't eligible to take out whatsoever more subsidized loans for your current programme. Withal, this does not impact your eligibility for unsubsidized loans.
- The interest on your existing subsidized loans is no longer subsidized by the government when you're in schoolhouse, a deferment, or in sure income-driven repayment plans. This means you are responsible for all involvement that accrues on your subsidized loans moving forward, as of the date of your connected or new enrollment.
- Yous aren't required to make payments on the interest that accrues while yous are in school. If you don't pay the interest that'due south accruing on your loans, it will capitalize, or be added to your principal balance at the end of your grace menstruum or deferment. Capitalization costs yous more in interest over the life of your loan. Making payments while you lot're in schoolhouse can save you coin in the long run.
If y'all reach the subsidy limit and lose the involvement subsidy, you lot get responsible for interest on your subsidized loans in your electric current program in certain situations.
- While enrolled in schoolhouse at least half fourth dimension
Earlier
losing the interest subsidy Later on
losing the involvement subsidy - During deferment periods
Before
losing the interest subsidy Subsequently
losing the interest subsidy - During certain periods of repayment under Income-Based Repayment or Pay As You Earn repayment plans
Earlier
losing the interest subsidy Later
losing the involvement subsidy - During forbearance periods
Before
losing the involvement subsidy Subsequently
losing the interest subsidy - During all other periods of repayment
Before
losing the involvement subsidy After
losing the interest subsidy
Notation that if you enroll in a longer program after previously losing your subsidy, you may become eligible for boosted subsidized loans upward to your new, longer, subsidy limit. Nonetheless, you are still responsible for interest that is accruing on your previous loans that lost the subsidy.
In addition, any loan that lost subsidy and which has been paid in full is non eligible for retroactive subsidy reinstatement.
Resources
Take questions about your specific state of affairs? Log into StudentAid.gov to discover your enrollment dates and borrowing history, or talk to your school for data about your published program length.
Source: https://mygreatlakes.org/educate/knowledge-center/150-subsidy-limit.html
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