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 loan you get. 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 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 type 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, married or 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 because 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 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.
| Lender | Loan limit |
|---|---|
| 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 deb. 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.
The Bureau of Labor Statistics may help you estimate your postgraduation salary, and you can use a student loan calculator to estimate your loan payment based on the loan amount and interest rate.
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.
However, 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 loans, 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, interest rate and repayment term. The standard repayment plan for federal student loans is 10 years; however, it takes borrowers an 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, 15 or 20 percent of that amount.
Is there a benefit to borrowing less than the cost of tuition?
Not everyone feels comfortable borrowing the full cost of tuition. Yes, federal student loans cover up to $7,500 annually for dependent students and $12,500 annual for independent students, but this is a lot of money that you’ll have to repay once you graduate.
If you prefer, you can borrow less than the cost of tuition. This can help you save on interest and walk away with less student loan debt. However, whatever balance isn’t covered will still be your responsibility, but there are more affordable forms of financial aid available.
How to pay for college after financial aid
If you’ve reached your limit on student loans, there are still ways to reduce the costs to make a college education financially easier:
- Attend an in-state school
- Explore online programs
- Federal work-study programs
- Live off-campus or with roommates to save money on living expenses
- Rent or buy used textbooks
- Scholarships and grants
- Work a part-time job
The bottom line
Students turn to private and federal student loans to cover a portion or the entirety of their educational costs. Although loan amounts are capped based on the type of lender, it’s still possible to accrue thousands of dollars in student loan debt that you’ll be responsible for once you graduate. If you want a more affordable option that won’t burden you financially in the future, consider alternative forms of financial aid, such as grants and scholarships.
