How Much Can You Take Out In Student Loans
How Much Can You Take Out In Student Loans?
When you’re deciding how much student loan money you can take out, keep in mind that the total amount of loan debt you take on may affect your future financial prospects. If you’re going to be paying off your loans for a long time, it’s important to consider how much you can afford to pay every month and whether that monthly payment will be affordable when your monthly income is lower than it is now.
The good news is that there are ways to manage your student loan debt so it won’t limit your future financial success. The first step is understanding what kind of options are available so that you can choose the one that’s best for your situation.
How Much Can You Take Out In Student Loans
Student loans aren’t limitless. The maximum amount you can borrow depends on factors including whether they’re federal or private loans and your year in school.
Undergraduates can borrow up to $12,500 annually and $57,500 total in federal student loans. Graduate students can borrow up to $20,500 annually and $138,500 total.
But just because you can borrow that much doesn’t mean you should. To keep higher education affordable, calculate how much you should borrow for college based on your expected future earnings and aim to keep your student borrowing below that amount.
Federal student loan limits
The maximum you can borrow depends on your year in school, your status as a dependent or independent student, and the type of loan. There are three main types of federal student loans: Direct subsidized, direct unsubsidized and direct PLUS.
To apply for federal student loans, submit the Free Application for Federal Student Aid — this FAFSA guide walks you through the process.Check the listSee 2022’s best student loans for parents, students and more. Thoroughly researched by our Nerds.
Direct subsidized and unsubsidized loan limits
Subsidized loans are for undergraduates only, while unsubsidized loans are available to both undergraduates and graduate students.
There are both annual and aggregate loan limits for these loans. The aggregate limit is the total amount of federal student loan debt you can take on throughout your undergraduate and graduate-level studies. If you reach your total limit, you can take out additional federal student loans if you first pay down your outstanding debt.
| Dependent undergraduate students | |
| First year | $5,500 overall; $3,500 subsidized |
| Second year | $6,500 overall; $4,500 subsidized |
| Third year and up | $7,500 overall; $5,500 subsidized |
| Total limit | $31,000 overall; $23,000 subsidized |
| Independent undergraduate students | |
| First year | $9,500 overall; $3,500 subsidized |
| Second year | $10,500 overall; $4,500 subsidized |
| Third year and up | $12,500 overall; $5,500 subsidized |
| Total limit | $57,500 overall; $23,000 subsidized |
| Graduate and professional students (unsubsidized only) | |
| Annual limit | $20,500 |
| Total limit | $138,500, including undergraduate loans |
If you’re a dependent student and your parents aren’t eligible for a direct PLUS loans — for example, if they have an adverse credit history — you may be eligible for additional unsubsidized loans.
Direct PLUS loan limits
PLUS loans are available to graduate and professional students, and to parents of dependent undergraduate students.
There are no specific caps on PLUS loan borrowing. The maximum amount of PLUS loans you can take out is the school’s cost of attendance minus other financial aid you receive or your child receives. Cost of attendance includes tuition and fees, room and board, and books and other supplies.
Max out federal subsidized and unsubsidized direct loan borrowing before tapping PLUS loans; PLUS loans have higher student loan interest rates.
Private student loan limits
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 |
student loan calculator
Make extra payments to pay off student loans faster. If you can free up more money for payments right now, you can cut down the total interest you pay, too.
Use this student loan payoff calculator to determine your debt-free date, then see how much time and money you could save by making extra student loan payments. You can see an amortization schedule as well.
| Average National Student Debt$28,400 | Total Monthly Payment$297 |
If you refinance your loans at a 3.66% rate then your loan payments will be $163 lower a year. See Refinance Rates
| LOAN | LOAN AMOUNT | INTEREST RATE | LOAN TERM | MONTHLY PREPAYMENT | MONTHLY PAYMENT | |
| Loan 1 | years | $297 | ||||
College is supposed to be fun, right? Hollywood sure thinks so: in movies like Old School, Legally Blonde and Accepted, it’s one-half wild parties, one-half intellectual and emotional discovery. But that’s Hollywood—the schools themselves paint a different, but equally attractive picture. Open any admissions office pamphlet and you’ll find students lounging cheerfully in grassy campus spaces; friendly, approachable professors chatting with small clusters of adoring undergrads; clean, peaceful dormitories; and constantly perfect weather.
While both of these portrayals contain some truth (there are parties; the weather is nice sometimes), there’s one aspect of college that is often left out, or at least pushed to the sidelines: the price tag. While it’s no secret that getting a degree has grown more expensive in recent years, the numbers are nonetheless surprising. The cost of tuition and fees at public four year institutions increased by 17% over the past five years alone, according to data from The College Board.
Before using the student loan calculator above, come prepared with a few pieces of information about your loan.
Loan amount
Loan amounts vary depending on whether you’re exploring a federal or private student loan. The loan amount you’re offered might also be limited based on your enrollment level (e.g., undergraduate versus graduate or professional student) or degree program.
Federal student loan amounts
Undergraduate students:
- Direct Subsidized Loans: Up to $5,500 annually.
- Direct Unsubsidized Loans: Up to $12,500 annually.
Graduate students:
- Direct Unsubsidized Loans: Up to $20,500 annually.
- Direct PLUS Loans: Up to the school’s reported cost of attendance, minus other financial aid received.
Parents of dependent undergraduate students:
- Parent PLUS loans: Up to the school’s reported cost of attendance, minus other financial aid received.
Private student loan amounts
Loan amounts for private student loans can vary by lender. Each lender sets its own borrowing criteria, annual borrowing limits, interest rates and repayment terms. In general, private student loan lenders offer loan amounts that cover the gap between a school’s cost of attendance and any other financial aid a student receives. Some lenders also impose lifetime borrowing limits, which may be up to $150,000 or more for some degrees. Regardless of whether you borrow federal or private student loans, borrow only the amount you need per school year after exhausting all grant and scholarship options. If you must take out loans to finance educational gaps, consider maximizing federal student loan limits before turning to a private student loan, as federal student loans come with additional benefits like income-driven repayment plans and standardized hardship programs.
Loan term
Your loan term is the amount of time you have to repay the loan in full. For federal student loans under a standard repayment plan, the default loan term is 10 years. However, student loans that are under an alternative payment plan offer terms from 10 to 25 years. Like private student loan amounts, private student loan repayment terms vary by lender. Terms for private student loans can be as short as five years and as long as 20 years. A shorter loan term can help you save more money on interest charges during your repayment period but result in a larger monthly payment. Some lenders offer lower interest rates as an incentive for a short term length. On the flip side, a longer term for your student loans will lower your monthly payment but will accumulate more interest charges over time. Before borrowing student loans, make sure you know all of the term options your lender offers so you can choose the right path for your financial needs.
Interest rate
The interest rate you’re offered depends on the type of lender you’re pursuing and your financial picture. Federal student loans offer the same interest rate to all borrowers, regardless of credit score or income. Private student loans, on the other hand, will often do a credit check and set interest rates according to your creditworthiness. The higher your credit score, the lower your interest rates. Keep in mind that the lowest interest rates advertised on lender websites may not be available to you. To find out what interest rates you’ll receive, take advantage of lenders’ prequalification features, if available. Prequalification allows you to input basic details about yourself and your desired loan in exchange for a snapshot of the rates and terms offered.
For many students, the only way to stay atop this rising tide has been by taking on an increasing amount of student loans. The result has been skyrocketing student loan debt over the past decade.
Not so fun, that – but don’t get discouraged. Sure, some recent graduates have student loan horror-stories to tell: high debt, low job prospects and a load of other expenses to boot; and others have simply stopped bothering to make loan payments at all (the total number of people with defaulted student loans recently climbed to over 7 million). Many graduates, however, find their debt to be manageable, and, in the long run, worthwhile.
The important thing is to know in advance what you’re getting yourself into. By looking at a student loan calculator, you can compare the costs of going to different schools. Variables like your marital status, age and how long you will be attending (likely four years if you are entering as a freshman, two years if you are transferring as a junior, etc.) go into the equation. Then with some financial information like how much you (or your family) will be able to contribute each year and what scholarships or gifts you’ve already secured, the student loan payment calculator can tell you what amount of debt you can expect to take on and what your costs will be after you graduate – both on a monthly basis and over the lifetime of your loans. Of course how much you will pay will also depend on what kind of loans you choose to take out.