SULA – Interest Subsidy – New Q & A Part 4

Understanding the requirements for calculating awards under SULA can be as brain-racking as the calculations themselves. Fortunately, ED provides fairly regular updates to its 150% Direct Subsidized Loan Limit Frequently Asked Questions. In March, ED provided guidance on a several topics which I’ve summarized for you below.

You can read these and other 150% Direct Subsidized Loan Limit – Frequently Asked Questions on the Departments FAQ Page Here: http://bit.ly/2mZ95gW

Interest Subsidy 

INT-Q6: If a student loses interest subsidy, but subsequently regains eligibility for Direct Subsidized Loans by enrolling in a longer program, will the student regain interest subsidy?  

INT-A6: Not on the loans that had lost interest subsidy. Once a loan loses interest subsidy, it does so permanently. However, if otherwise eligible, the student may receive additional Direct Subsidized Loans. 

For example, consider a student who was enrolled in a 4-year bachelor’s degree program and had a subsidized usage period of 3 years, withdraws from the 4-year program, and then enrolls in a 1-year undergraduate certificate program. The student is not only ineligible for Direct Subsidized Loans in the 1-year program, but also loses interest subsidy on all of the outstanding Direct Subsidized Loans taken for attendance in the 4-year program. If this student later re-enrolls in the same or another 4-year program, the student may borrow subsidized loans for up to 3 more years.  However, the loans from the first 3 years of study in the 4-year program do not regain interest subsidy. Any additional loans borrowed upon re-enrollment in the 4-year program will have interest subsidy unless the student’s enrollment again triggers the loss of interest subsidy.  

INT-Q7: Is there a way for a school to determine when a student lost interest subsidy on a Direct Subsidized Loan?  

INT-A7: Yes. On the National Student Loan Data System’s Professional Access site, schools may view the date that the student’s loans lost subsidy by navigating to the enrollment tab and then selecting the subsidized usage button.