Federal Loan Schedule of Reduction

The Schedule of Reductions (SOR) is a federal regulation that requires schools to reduce a student’s annual Federal Direct Loan eligibility for students who are enrolled less than full-time in degree-pursuant coursework.

Federal Direct Subsidized and Unsubsidized Loans are subject to this loan proration regulation as well as Graduate PLUS Loans (for eligible legacy borrowers). The parent PLUS loan is not affected by this rule.

Federal Loan Enrollment Requirements and Eligibility

The Department of Education establishes annual Federal Direct Loan limits based on a student’s grade level, dependency status, and enrollment status. Students who are enrolled less than full-time may have reduced annual loan limits under SOR regulations, while students who remain enrolled full-time throughout the academic year generally remain eligible for the maximum annual Federal Direct Loan amount allowed for their grade level and program of study, up to the applicable federal borrowing limits. Learn more about these loans, including borrowing limits, by visiting our Subsidized and Unsubsidized Borrowing Limits and Graduate PLUS Loan webpages.

Loan eligibility is based on enrollment at the time financial aid is disbursed, as well as the number of required semesters in the student's degree program for the academic year. Because many programs do not require summer enrollment, annual loan eligibility is usually split between the fall and spring semesters. However, students enrolled in a program that requires summer enrollment must have their annual Direct Loan eligibility disbursed over three semesters (fall, spring, and summer).

Changes in enrollment may affect:

• Current semester eligibility
• Future loan disbursements
• Overall financial aid eligibility
• Federal student loan annual borrowing limits

It’s important to know that if students enroll less than full-time in degree-pursuant coursework, withdraw from classes after the semester begins, or fail to begin attendance in courses – resulting in less than full-time enrollment – this regulation may impact your federal loan eligibility for the academic year.

For additional information about enrollment standards for financial aid eligibility, visit our Enrollment Standards & CPoS webpage.

Undergraduate Student Example

A dependent undergraduate junior student enrolls in 6 credit hours in the fall and 12 credit hours in the spring — 18 credit hours total for the academic year. A full-time (24 credit hours) student in a program that does not require summer enrollment would be eligible to borrow up to $7,500 in Federal Direct Loans (Subsidized and Unsubsidized) for the academic year as a junior, which is $3,750 per semester.

This means they qualify for 75% (18 divided by 24) of their annual loan eligibility because the student is below full-time enrollment for the academic year. 75% of the $7,500 annual limit would be $5,625. In this scenario, the student can borrow $1,875 for the fall semester (25% of their annual limit) and $3,750 for the spring semester (50% of their annual limit).

Graduate Student Example

A graduate student enrolls in 6 credit hours in the fall and 6 credit hours in the spring — 12 credit hours total for the academic year. A full-time (18 credit hours) student in a program that does not require summer enrollment would be eligible to borrow up to $20,500 in Federal Direct Unsubsidized Loans for the academic year, which is $10,250 per semester.

This means they qualify for 67% (12 divided by 18) of their annual loan eligibility because the student is below full-time enrollment for the academic year. 67% of the $20,500 annual limit would be $13,735. In this scenario, the student can borrow $6,867 for the fall semester and $6,868 for the spring semester.