How Much Can You Take Out In Private Student Loans
If you’re considering taking out private student loans, it’s important to know how much you can take out.
Private student loans are an alternative to federal student loans, which are issued by the U.S. Department of Education through a variety of different lenders and programs. Private student loans are issued by banks, credit unions and other financial institutions, and can be used for a variety of educational expenses, including tuition and fees as well as room and board costs.
The amount you’re able to borrow in private student loans depends on your credit score, income level and other factors. Many lenders have minimum FICO scores requirements: Generally speaking, the higher your score is above the minimum requirement, the more money you’ll be able to borrow at interest rates that are lower than those offered on federal student loans.
Your income level also plays a role in determining how much money you can borrow from private lenders: Some lenders require that applicants have earned at least $24,000 per year before applying for private student loans; others allow applicants to apply regardless of their income level or job status (although most lenders prefer that applicants have steady jobs).
The amount you can borrow in private student loans may also depend on whether or not you have any existing balances on other
How Much Can You Take Out In Private Student Loans
Limits for private student loans are different than limits for federal loans. Private lenders use factors such as your income, credit score, current major, future projected income, and if you have a cosigner to determine how much to lend you.
They’ll also look at how much you’ve already taken out in federal and private student loans. In general, students who have already borrowed money for school will receive less than those who have not.
Limits are usually higher for graduate and professional students because these degrees cost more and usually result in higher salaries after graduation.
Private lenders typically have annual and aggregate loan limits. The maximum annual limit can range from $15,000 to the annual cost of attendance, depending on the lender and your personal criteria. The annual amount you receive will be divided between the two semesters.
The maximum aggregate limits normally range from $75,000 to $120,000 for undergraduate students and $150,000 to $300,000 for graduate or professional students.
When it comes to student loans, there’s a difference between how much you can borrow and how much you should borrow. While many lenders will let you borrow the entire annual cost of attendance, this may be more than you can afford to repay.
A basic rule of thumb is not to borrow more than you’ll earn in your first year out of college. If you exceed that amount, you may find it difficult to repay your student loans on top of other bills.
You can use sites like Payscale.com or the official Bureau of Labor Statistics wage data site to find the average starting salary for your profession. The website CollegeSimply reports data on starting salaries the colleges themselves report to the US Department of Education. Search for your school and look at the starting salaries.
If you know the general area where you want to work after graduation, you can look up salary information for that region. The more specific you get, the less chance that you’ll borrow more than you can easily afford.
You should also consider whether you will attend graduate or professional school after receiving an undergraduate degree. If so, you should factor in those costs when deciding how much to borrow for your bachelor’s degree.
It’s even more crucial to stick to these basic guidelines when taking out private student loans, as they have fewer options for struggling borrowers. Private student loans do not offer income-driven repayment plans or loan forgiveness options as federal loans do, and they also have shorter forbearance programs with no pause on interest accrual. That means your loan balance could balloon if you defer private student loan payments.
If you’re having trouble affording your private student loans, the only option may be refinancing to a longer repayment term. But doing this will often result in paying a higher total interest over the life of the loan.
Private student loan limits vary by lender. Generally, the amount you borrow can’t exceed your school’s total cost of attendance.
Max out federal student loan borrowing before taking out private student loans. Federal loans have protections that private loans don’t, including income-driven repayment plans and loan forgiveness programs.
| Lender | Private student loan minimums and limits |
|---|---|
| Ascent | Non-co-signed future income-based option:Minimum loan amount: $2,001Maximum loan amount: $200,000 (lifetime maximum). Annually, the cost of attendance.Co-signed and non-co-signed credit-based options:Minimum loan amount: $2,001Maximum loan amount: $20,000 |
| Citizens Bank | Minimum loan amount: $1,000Maximum loan amount: $100,000 (lifetime maximum). Annually, the cost of attendance minus financial aid. |
| College Ave | Minimum loan amount: $1,000Maximum loan amount: School-certified cost of attendance minus financial aid. |
| CommonBond | Minimum loan amount: $2,000Maximum loan amount: $500,000 (lifetime maximum). Annually, the school-certified cost of attendance. |
| Discover | Minimum loan amount: $1,000Maximum loan amount: School-certified cost of attendance minus financial aid. |
| Earnest | Minimum loan amount: $1,000Maximum loan amount: School-certified cost of attendance. |
| LendKey | Minimum loan amount: $1,000Maximum loan amount: School-certified cost of attendance minus financial aid. |
| MEFA | Minimum loan amount: $1,500Maximum loan amount: School-certified cost of attendance minus financial aid. |
| MPOWER | Minimum loan amount: $2,001Maximum loan amount: $25,000 per semester and $50,000 annually |
| Navy Federal | Minimum: $2,000 Maximum: $120,000 for undergraduates and $160,000 for graduate students. |
| PNC | Minimum: $1,000Maximum: $50,000 |
| RISLA | Minimum: $1,500Maximum: $45,000 |
| Prodigy Finance | Minimum: $15,000 ($35,000 in certain U.S. states)Maximum: $220,000. |
| Sallie Mae | Minimum loan amount: $1,000Maximum loan amount: School-certified cost of attendance |
| SoFi | Minimum loan amount: $5,000Maximum loan amount: School-certified cost of attendance |
| Custom Choice | Minimum: $1,000Maximum: The school-certified cost of attendance minus other aid, not to exceed $99,000 |
federal student loans
If you apply for financial aid, you may be offered loans as part of your school’s financial aid offer. A loan is money you borrow and must pay back with interest.
If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan. Student loans can come from the federal government, from private sources such as a bank or financial institution, or from other organizations. Loans made by the federal government, called federal student loans, usually have more benefits than loans from banks or other private sources. Learn more about the differences between federal and private student loans.
The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (Direct Loan) Program. Under this program, the U.S. Department of Education is your lender. There are four types of Direct Loans available:
Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school.
Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.
Direct PLUS Loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid. Eligibility is not based on financial need, but a credit check is required. Borrowers who have an adverse credit history must meet additional requirements to qualify.
Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.
How much money can I borrow in federal student loans?
It depends on whether you’re an undergraduate student, a graduate or professional student, or a parent.
- If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status.
- If you are a graduate or professional student, you can borrow up to $20,500 each year in Direct Unsubsidized Loans. Direct PLUS Loans can also be used for the remainder of your college costs, as determined by your school, not covered by other financial aid.
- If you are a parent of a dependent undergraduate student, you can receive a Direct PLUS Loan for the remainder of your child’s college costs, as determined by his or her school, not covered by other financial aid.