Less Than Full-Time Loan Reductions

Schedule of Reductions (SOR)
Under the One Big Beautiful Bill Act, for Direct Loans packaged and originated for the 2026–27 academic year (AY), a student’s annual loan limit must be adjusted for less-than-full-time enrollment (known as the Schedule of Reductions or SOR). This requirement applies to all undergraduate and graduate student Direct Loan borrowers for Direct Subsidized Loans, Direct Unsubsidized Loans, and graduate PLUS Loans, but it does not apply to parent PLUS Loans. As a general rule, students may not receive more than one-half of their full-time annual loan limit in one semester.

• Full-Time Academic Year Definition: To be considered full-time for the academic year
  • Undergraduate students: Must take 24 credit hours in an academic year.
  • Graduate students: Must take 18 credit hours in an academic year.
  • Doctoral students: Generally must take 18 credits in an academic year. However, based on the research work, they may have a lesser number of credits to qualify as full time status.
• Half-time Enrollment: Students must be enrolled for at least a half-time load of financial aid-eligible classes to receive a Federal Direct Loan in any given semester. The minimum number of credits per semester to be considered half-time is:
  • Undergraduates: 6 credit hours
  • Graduate/Doctoral students: 4.5 credit hours (if 1.5 credit course is not available, 6 credits enrollment is required for federal loan awarding and disbursement)
• Less than Full-Time Enrollment: Starting with the 2026-2027 award year, Direct Loan amounts for students who are not full-time for the full academic year will need to be adjusted based on enrollment.

• Less than Full-Time Formula for Loan Reduction:

  number of credit hours enrolled for academic year number of credit hours considered full time for that academic year for the program of study

  x 100

  = reduced annual loan limit percentage (rounded to nearest whole percentage point)

• Loan Reduction at the time of Disbursement:
  At the time of loan reduction, the student's loan will be reduced based on the number of credits enrolled, even though they may have been awarded as a full-time student.

Loans Subject to Reduction: The loan reduction rule applies to all undergraduate, graduate, and doctoral student Federal Direct Loan borrowers, utilizing Direct Subsidized Loans, Direct Unsubsidized Loans, and Graduate PLUS Loans. Even those considered legacy borrowers who have borrowed from any of these loan programs prior to July 1, 2026 are subject to this rule.

Parent PLUS Borrowers: Since this rule only impacts student borrowing, the Federal Direct Parent PLUS Loan is not subject to these adjustments for less-than-full-time enrollment.

Loan Reduction Calculation Example before a Fall loan is Disbursed

A dependent first-year student can borrow up to $5,500 in federal student loans for the school year. Student plans to take 12 credit hours in the Fall and 12 credit hours in the Spring, which makes them a full-time student.

• Full-time for the year = 24 credits (12 Fall + 12 Spring)
• Loan is disbursed in two equal payments:
  • Fall: $2,750
  • Spring: $2,750
  • Total: $5,500

A dependent first-year student cannot receive more than $5,500 for the academic year (Fall, Spring, Summer). In the past, students could take six credits per semester and still receive the full loan amount. Now, loan eligibility is calculated based on the number of credits. Eligibility is checked at the time of disbursement(s).

What Happens When a Class is Dropped Before Fall Disbursement

The student was enrolled in 12 credits in the Fall and dropped to 6 credits before the loan is disbursed in the fall. The loans must be recalculated, as the student will be completing 18 out of 24 credit hours as follows:

• Fall: 6 credits
• Spring: 12 credits (expected)
• Total: 18 credits

Percent of credits completed: (18 / 24) x 100 = 75%

Reduced Loan Eligibility
Academic Year Eligibility x Percent Credits Completed
$5,500 x 75% = $4,125 (maximum loan eligibility for the academic year)

What Happens When a Class is Dropped After Fall Disbursement

If the student is enrolled full-time at the time of disbursement and later drops to less than full-time, loans must be recalculated.

Example: The student was enrolled for 12 credits in the fall. After the fall disbursement, the student drops to 6 credits.

• Fall: 12 credits (drops to 6 credits after disbursement)
• Spring: 12 credits (expected)
• Total: 18 credits

Percent of credits completed: (18 / 24) x 100 = 75%

• Fall: $2,750 (disbursed)
• Spring: $2,750 (expected)
• Total: $5,500

Reduced Loan Eligibility
Academic Year Eligibility x Percent Credits Completed
$5,500 x 75% = $4,125 (maximum loan eligibility for the academic year)

Adjusted Loans

• Fall: $2,750 (disbursed)
• Spring: $4,125 - $2,750 = $1,375 (expected)
• Total: $4,125