Understanding Student Loan Limits: Maximum Borrowing Potential
Explore the limits on student loan borrowing, understanding the maximum amount you can secure through federal and private loans, and the factors that influence these limits.
Federal student loan limits
The US federal government sets annual and aggregate loan limits for federal student loans. These limits vary depending on your dependency status and year in school.
Annual loan limits
Annual loan limits refer to the maximum amount of money you can borrow in federal student loans each year.
Undergraduate students
- Dependent undergraduate students: $5,500 to $12,500 per year, depending on year in school
- Independent undergraduate students: $9,500 to $12,500 per year, depending on year in school
Graduate or professional students
- $20,500 per year
Aggregate loan limits
Aggregate loan limits refer to the total amount of money you can borrow in federal student loans over the course of your education.
Undergraduate students
- Dependent undergraduate students: $57,500, of which no more than $23,000 can be in subsidized loans
- Independent undergraduate students: $57,500, of which no more than $23,000 can be in subsidized loans
Graduate or professional students
- $138,500, of which no more than $65,500 can be in subsidized loans
Private student loan limits
Private student loan limits vary depending on the lender. Some lenders may set their own limits, while others may use the federal student loan limits as a guideline.
How to calculate your maximum borrowing potential
To calculate your maximum borrowing potential, you will need to know your annual and aggregate loan limits. You can find this information on the Federal Student Aid website.
Once you know your limits, you can subtract the amount of federal student loans you have already borrowed to determine how much more you can borrow.
For example, if you are a dependent undergraduate student in your first year of school, your annual loan limit is $5,500. If you have not yet borrowed any federal student loans, then your maximum borrowing potential for the year is $5,500.
It is important to note that your maximum borrowing potential may be lower than your federal student loan limits if you have other debt, such as credit card debt or private student loans.
Tips for borrowing student loans responsibly
- Only borrow what you need. Remember that student loans must be repaid, and interest can add up over time.
- Consider all of your options, including scholarships, grants, and work-study.
- Get pre-approved for a private student loan before you apply. This will give you an idea of how much you can borrow and what interest rate you will qualify for.
- Make a plan for how you will repay your loans. This may include creating a budget and setting up automatic loan payments.
Student Loan Limits—How Much Can You Get?.
The amount you can borrow in student loans depends on several factors, including the type of loan, your status as a dependent or independent student, and your year in school.
Federal Direct Subsidized and Unsubsidized Loans (Undergraduate Students):
- Dependent Students (whose parents' financial information is used on the FAFSA):
- First-year students: Up to $5,500 per year (with a maximum of $3,500 in subsidized loans).
- Second-year students: Up to $6,500 per year (with a maximum of $4,500 in subsidized loans).
- Third-year and beyond students: Up to $7,500 per year (with a maximum of $5,500 in subsidized loans).
- Independent Students (or dependent students whose parents are unable to obtain a PLUS loan):
- First-year students: Up to $9,500 per year (with a maximum of $3,500 in subsidized loans).
- Second-year students: Up to $10,500 per year (with a maximum of $4,500 in subsidized loans).
- Third-year and beyond students: Up to $12,500 per year (with a maximum of $5,500 in subsidized loans).
- Dependent Students (whose parents' financial information is used on the FAFSA):
Federal Direct PLUS Loans (Parent and Graduate Students):
- The limit on Direct PLUS Loans is the cost of attendance minus any other financial aid received.
Federal Perkins Loans:
- Perkins Loans have a maximum annual limit, but the exact amount can vary. Undergraduate students can typically borrow up to $5,500 per year, while graduate students can borrow up to $8,000 per year.
Federal Pell Grants:
- Pell Grants are need-based grants, and the maximum award amount for the 2021-2022 award year was $6,495. The amount can change each year.
State and Private Loans:
- State and private loans may have different borrowing limits, terms, and interest rates. These limits vary depending on the lender and the state.
It's important to note that these limits are subject to change, and you should check with the U.S. Department of Education or your school's financial aid office for the most up-to-date information on federal student loan limits. Additionally, borrowing the maximum amount of student loans may not always be in your best financial interest, as it can lead to significant debt after graduation. It's essential to borrow responsibly and explore other financial aid options such as scholarships and grants to reduce your overall student loan burden.