As a new student getting into college, you may have looked on your NSLDS (National Student Loan Data System) and probably found the words SULA ELIGIBLE, right?
Some students initially assume it’s something really cool, but what really is the word SULA? How can you become eligible?. These are perplexing questions new students ask frequently.
Students who have tried to personally fund a college education will have encountered acronyms such as FAFSA, SAT, ACT, GRE, etc. They all come into play as financial aids for students at one time or another.
One of such acronyms is SULA. Although it is a relatively new addition to the team, it has a huge part to play in the amount of interest you pay on your student loan.
What does SULA mean?
SULA is an acronym that stands for “Subsidized Usage Limit Applies”. This is as a result of the department of Education’s new 150% rule for Subsidized loans.
This rule applies to new students (as of July 1, 2013) who have no student loan indebtedness as they enter college. The student who fulfills the above requirement falls into the category of being “SULA ELIGIBLE“.
SULA ELIGIBLE students are granted subsided loans. However, this loan is only valid if you manage to complete your program in 150% of the standard stipulated time given for the program.
If for any reason you fail to satisfy this condition (150% of program time), you lose all subsidies attached to the loan by virtue of SULA policies.
Brief History Of SULA
The SULA system came into play on the 1st of July in the year 2013. Only new students; students that haven’t accumulated any previous loans or students who have paid off old loans and returned to school after the above-stated date, partake in SULA.
There are basically two types of loans that the federal government approves that have low, fixed interest rates. They are:
- Direct Stafford loans (formerly Stafford Loans)
- PLUS Loans (parents and graduate students only)
However, in SULA, the loan in consideration is the Direct Stafford loans. These loans may be subsidized based on financial need.
Based on your income and family participation, the federal government may choose to subsidize your loan or its interest while you attend school. This subsidy implies that as long as you are in school, the federal government pays for the interest on your loan.
However, it was seen and observed that students over time, started misusing this privilege. This implied that the government kept on paying the interests on students loan, due to their continued stay in school.
The government started making huge losses on students who are failing to meet up the educational requirements of their respective schools. This was done by keeping track of each students’ educational record at all times.
The department of education, therefore, says the need to bring about a system(timer) that will not only eliminate the losses made by the government but would also encourage students to strive harder to succeed.
Therefore, a 4-year Bachelor’s degree receives subsidies for the first 6 years a student studies while a 2-year Associate’s degree has subsidies for 3 years.
This change will make students try to finish their program faster and speed up their entry into the labor market. As human beings tend to perform better with motivation, the thought of paying the entire loan and interest motivates students to perform better.
Limits of Sula System:
The first limit of SULA is the enrollment status of students. Students enrolled full-time, for example, use 100% of their eligibility time for each academic year. Part-time students only use 50%.
That means, part-time students enrolled at a 2-year degree program have 6 years to complete their degree and receive subsidized interest, so long as they remain part-time.
The second limit is the permanent loss of interest subsidy. Once a loan loses the interest subsidy, it does so permanently. However, if otherwise eligible, the student may receive additional Direct Subsidized Loans, for example, if he or she enrolls in a longer program of study.
Being SULA ELIGIBLE does not entirely mean a full pass on your loan interest, it comes at a price. It is its own way to award academic excellence because only if you manage to complete your program within the specified time will it be valid.
So why waste your funds; discipline yourself to study hard and save your self the extra cost by keying into the SULA privilege.
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