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You may be able to borrow up to the full cost of your college education in student loans, although the exact amount depends on the type of student loan you borrow. Dependent and independent undergraduate students can borrow up to a total of $31,000 and $57,500 in federal student loans, respectively, and many private loans set lifetime limits.
Regardless of the maximum loan amount, you should only borrow what you truly need. The more you borrow, the more interest will accrue. To get a rough estimate of how much you’ll need to borrow, tally up tuition and fees, housing, books, supplies and dining expenses, then subtract any other aid you’ve received.
Federal student loan limits
Using standard federal student loan limits, the cost of attendance and your Free Application for Federal Student Aid (FAFSA) information, your school determines how much you’re eligible to borrow in federal student loans. The amount you can take out is based on:
- The cost of attending the school.
- Your year in school.
- Your status as a dependent or independent student (whether your parents financially support you).
There are three main types of federal student loans:
- Direct Subsidized Loans: Available to undergraduate students with financial need. The Department of Education pays interest costs while the borrower attends school and during the grace deferment periods.
- Direct Unsubsidized Loans: Available to undergraduate and graduate students, regardless of financial need. The borrower pays all interest costs.
- Direct PLUS Loans: Available to parents and graduate students, regardless of financial need.
Each of the different types of federal student loans has its own loan limits.
Undergraduate federal loan limits
If your parents financially support you, then you’re considered a dependent student. Federal student loan limits for dependents are $5,500 to $7,500 each year, up to a lifetime limit of $31,000.
You may be considered independent if you are over the age of 24, a military veteran or married, or if you financially support yourself. Independent students can borrow $9,500 to $12,500 annually and up to $57,500 total. If you’re a dependent undergrad but your parents don’t qualify for a parent PLUS loan, you may be able to borrow up to the federal student loan limits for independent students.
|Year in school||Annual loan limit (dependent undergraduate student)||Annual loan limit (independent undergraduate student)|
|Year 1||$5,500 (up to $3,500 may be subsidized)||$9,500 (up to $3,500 may be subsidized)|
|Year 2||$6,500 (up to $4,500 may be subsidized)||$10,500 (up to $4,500 may be subsidized)|
|Year 3 and beyond||$7,500 (up to $5,500 may be subsidized)||$12,500 (up to $5,500 may be subsidized)|
|Lifetime maximum limit||$31,000 (up to $23,000 may be subsidized)||$57,500 (up to $23,000 may be subsidized)|
Graduate federal loan limits
Students working on a graduate or professional degree can borrow up to $20,500 per year in Direct Unsubsidized Loans, with a lifetime maximum of $138,500 up to $65,000 in subsidized loans (including any federal loans borrowed during undergraduate school). If a borrower hits the graduate loan limit and needs to borrow more, they can take out a federal grad PLUS loan, up to the total cost of attendance.
|Type of loan||Loan limit|
|Direct Unsubsidized Loan||$20,500 annually (lifetime max of $138,500, including federal undergraduate loans)|
|Grad PLUS loan||Up to the cost of attendance, minus any other financial aid received|
Private student loan limits
Private student loans are originated by private institutions such as banks, credit unions and online lenders. Private student loans are usually best when you’ve maxed out your federal financial aid potential, since they require hard credit checks for approval and lack benefits like loan forgiveness opportunities and income-driven repayment plans.
While many lenders will allow you to borrow up to the total cost of attendance, the total amount that you can borrow will vary based on the lender, your major, your credit score and whether or not you have a co-signer.
Below are examples of student loan limits among some private lenders.
|Ascent||$200,000 aggregate for undergraduate, $400,000 for graduate|
|Citizens Bank||$350,000 aggregate (lower for some degrees)|
|College Ave||Total cost of attendance ($150,000 for some degrees)|
|Earnest||Total cost of attendance|
|Sallie Mae||Total cost of attendance|
|SoFi||Total cost of attendance|
How much should you borrow in student loans?
Although student loan limits define how much you can borrow, you aren’t required to borrow the maximum if you don’t need it. Depending on the loan terms, it could take years to pay off the debt, and the longer it takes, the more interest accrues — so it’s usually best to borrow just as much as you need.
As a rule of thumb, try to keep your monthly student loan payment around 10 percent of your projected after-tax income your first year out of school. For example, if your take-home pay is $2,800 a month, then your student loan payments shouldn’t exceed $280.
Can you increase your student loan amount?
Private lenders likely won’t let you exceed their borrowing limits — and you also can’t borrow more than the federal student loan limits, even if you’re attending an expensive school. If you or your parents are willing to take out a PLUS loan, you might be able to fill the gaps that way.
Just keep in mind that Parent PLUS loans have the highest interest rates out of all of the federal loan products and could lead to more high-interest debt down the road.
What happens if you don’t use all of your student loan?
If you don’t use all of your student loan, the best thing to do is return the money to your lender. This reduces your outstanding debt and the interest that accrues. Your financial aid office should be able to assist with this.
You do have the option of keeping the money for the next semester if you’d prefer. However, if the money is from an unsubsidized federal loan or a private loan, interest will accrue while the money sits in your bank. This means that it’s better to send it back to the lender and wait until you need the money to get a new loan, minimizing the interest you owe.
How to calculate your student loan payment
On a typical repayment plan, your student loan payment will depend on your total loan amount, your interest rate and your repayment term. The standard repayment plan for federal student loans is 10 years; however, it takes borrowers and average of 10 to 30 years to pay off their student loan debt.
Due to interest accrual if you opt for a shorter repayment plan, your monthly payments will be higher than if you select a longer repayment plan, even if the principal loan amount is the same.
To calculate your student loan payment and to see how that payment changes based on different loan amounts, interest rates and terms, use a student loan calculator. You can also see how your payment will change if you’re able to put extra payments toward your loan and how much you could save in interest.
If you’re using an income-driven repayment plan, the calculation is a little different. In these cases, your student loan payment will not use your loan amount. Instead it looks at your discretionary income — calculated according to your total income and family size — and charges you 10 or 15 percent of that amount.
How to pay for college after financial aid
If you’ve reached your limit on student loans, there are still ways to make a college education financially possible.
Scholarships and grants
Regardless of how much you’re offered in loans, scholarships and grants should always be on the top of your list when it comes to paying for college. Unlike loans, scholarships and grants are often referred to as “free money” because you aren’t required to pay back those funds.
Scholarships and grants can be offered by the government, states, universities or private organizations. The key to maximizing potential scholarship money is to apply for as many as possible. Know the specific application deadlines, requirements and aid amounts before you apply and keep a detailed spreadsheet of the information so you don’t lose track.
There are scholarships offered for just about everything. Scholarship search engines can help you find scholarships that you qualify for based on things like your major, hobbies or future career aspirations.
There’s also a need-based grant, the Pell Grant, that’s offered by the federal government and is awarded to those who meet the financial requirements listed on their FAFSA. Every year, the Education Department sets a maximum award amount; for the 2022-23 school year the maximum comes out to $6,895.
Federal work-study programs are a form of financial aid designed for students with financial need. The program helps you find part-time employment with a company that partners with your school, and the money you earn goes straight to you. These jobs are typically on-campus and the weekly hours you work can’t exceed your total Work-Study award.
How much you can earn depends on when you apply, your level of financial need and the amount of funding your school has available, although you’re guaranteed at least the federal minimum wage. If you’re interested in work-study, you’ll see your eligibility after filling out the FAFSA.
Choose more affordable options
If you’ve maximized your scholarship and grant potential and don’t qualify for work-study, consider other ways to make school more affordable. Some small-scale changes include opting to rent or buy used textbooks instead of new, living off campus or getting roommates.
You can also consider transferring to an in-state school, trying out an online program or dropping to half-time enrollment while you work a part-time job.