Chapter	5
Loan	Limit	Proration
Proration	Overview
The	annual	maximum	loan	amount	an	undergraduate	student	may	receive	must	be	prorated	(reduced)	when	the	borrower
is:
Enrolled	in	a	program	that	is	shorter	than	a	full	academic	year;	or
Enrolled	in	a	program	that	is	one	academic	year	or	more	in	length	but	is	in	a	remaining	period	of	study	(a	period	of
study	at	the	end	of	which	a	student	will	have	completed	all	requirements	of	the	program)	that	is	shorter	than	a	full
academic	year.
With	one	exception	(see	"Proration	of	the	Annual	Loan	Limit	for	Students	who	Graduate	Early	From	Clock-Hour	Programs"
later	in	this	chapter),	the	annual	loan	limits	for	Direct	Subsidized	Loans	and	Direct	Unsubsidized	Loans	are	prorated	only
in	these	two	situations.	Loan	limits	are	not	prorated	based	on	a	student9s	enrollment	status,	such	as	when	a	student	is
enrolled	less	than	full	time,	or	when	a	student	is	enrolled	for	a	period	of	less	than	a	full	academic	year	that	is	not	a
remaining	period	of	study.
The	annual	loan	limit	for	Direct	Unsubsidized	Loans	is	not	prorated	for	students	enrolled	in	graduate	or	professional	level
programs.	Loan	proration	requirements	also	do	not	apply	to	students	taking	preparatory	coursework	or	coursework
necessary	for	teacher	certification.	This	is	because	the	annual	loan	limit	must	be	prorated	only	when	a	student	is	enrolled
in	a	program	or	remaining	portion	of	a	program	that	is	shorter	than	an	academic	year.	Students	taking	preparatory
coursework	or	teacher	certification	coursework	are	not	considered	to	be	enrolled	in	a	program	for	purposes	of	awarding
Title	IV	aid.
It9s	important	to	understand	that	loan	limit	proration	determines	the	maximum	loan	amount	that	a	student	may	borrow
for	a	program	or	remaining	balance	of	a	program,	not	the	actual	loan	amount	a	student	is	eligible	to	receive.	In	some
cases,	the	loan	amount	a	student	is	eligible	to	receive	(based	on	costs,	SAI,	and	OFA)	may	be	less	than	the	prorated	loan
limit.
Use	of	Fractions	vs.	Decimals	When	Prorating	Loan	Limits
As	we	explain	in	more	detail	below,	proration	involves	multiplying	the	annual	loan	limit	by	a	fraction.	You	may	choose	to
convert	the	fraction	to	a	decimal	and	then	multiply	the	annual	loan	limit	by	the	decimal,	but	this	conversion	is	not	a
requirement.	However,	you	should	be	consistent	in	the	method	you	use,	since	the	fraction	and	decimal	calculations
sometimes	result	in	slightly	different	prorated	loan	limits,	as	shown	in	the	examples	later	in	the	chapter.
Using	the	School9s	Academic	Year	Definition	If	Longer	Than	the	Title	IV	Minimum
As	explained	above,	proration	of	the	annual	loan	limit	is	required	when	an	undergraduate	student	is	enrolled	in	a	program
that	is	shorter	than	an	academic	year	or	is	enrolled	in	a	remaining	period	of	study	that	is	shorter	than	an	academic	year.
A	school	may	choose	to	define	its	academic	year	as	longer	in	weeks	or	hours	than	the	minimum	statutory	requirements.	If
so,	the	school9s	standard	3	not	the	statutory	minimum	3	determines	whether	a	program	or	a	final	period	of	study	is	shorter
than	an	academic	year.
Separate	Calculations	for	the	Combined	Subsidized	and	Unsubsidized	Annual	Loan	Limit	and	the	Maximum	Subsidized
Loan	Limit	Proration
34	CFR	685.203(a),	(b),	(c)