For many students and their families, federal student loans play a crucial role in bridging the financial gap to make college education more accessible. However, it’s essential to understand that federal student loans come with borrowing limits to ensure responsible lending and manageable debt. In this article, we will explore federal student loan limits, discussing the various loan types and the maximum amounts students can borrow to fund their educational endeavors.
Federal Student Loan Limits
Federal student loan limits adjust based on whether your parents or guardians can claim you as a dependent, the type of loan you’ll use and what year you’re in school. For instance, both independent and dependent first-year students can borrow $3,500 in subsidized loans. But dependent students are limited to $2,000 in unsubsidized loans, while independent students can borrow up to $6,000 in unsubsidized loans.
Subsidized vs. Unsubsidized Loans
Undergraduate students loans are classified as either subsidized or unsubsidized. Here’s how they differ:
- Subsidized loans don’t accrue interest when you’re enrolled in school at least part-time, during periods of deferment and during your six-month grace period after you leave school. When you start to repay your loans, you’ll be responsible for your loan plus the interest that starts accruing after you leave school.
- Unsubsidized loans accrue interest even while you’re in school. The good news is that you don’t have to start making payments until your grace period ends. The bad news is that your payments will be higher compared to subsidized loans since your interest started accruing immediately upon disbursement, not graduation.
Do all federal student loans have the same limit?
The Department of Education has set strict limitations on the amount college students can borrow based on several factors, including dependency status, year in school, and other financial aid received. This is included in the Free Application for Federal Student Aid (FAFSA).
Even if multiple federal loans are available to you, though, some should take priority over others.
For example, federal subsidized loans can be much more affordable than unsubsidized loans. That’s because the government pays (or subsidizes) any interest that accrues on that loan while you’re still in school. With unsubsidized loans, the interest just builds.
Additionally, you’ll find that certain federal loans have different maximum borrowing limits depending on whether you’re considered a dependent student or an independent one. This designation is based on factors like age, marital status, occupation or grade level.
Direct Loan limits for dependent students
Direct Loans, sometimes referred to as Stafford Loans, are college education loans provided by the federal government for undergraduate, graduate, and professional students.
They come in two varieties: subsidized or unsubsidized. The federal government covers interest on subsidized loans while the borrower is in school or during deferment, and students cover the interest on unsubsidized loans.
Subsidized loans from the federal government are only available to those who demonstrate financial need and are pursuing an undergraduate degree. While subsidized loans ultimately cost the borrower less because of the covered interest payments, unsubsidized loans have fewer restrictions on how much you can borrow.
For dependent students—that means listed on someone else’s tax return as a dependent child or adult—federal student loan limits apply as follows:
|Year in school||Annual borrowing limit, subsidized loans for dependent students||Annual borrowing limit, unsubsidized loan for dependent students|
|First-year undergraduate students||$3,500||$5,500 total (including subsidized)|
|Second-year undergraduate students||$4,500||$6,500 total (including subsidized)|
|Third- and fourth-year undergraduate students||$5,500||$7,500 total (including subsidized)|
|Aggregate loan limits||$23,000||$31,000 (including subsidized)|
Direct Loan limits for independent students
College students who can prove they are independent may qualify for more federal funding to help cover the cost of their education. Independence as a student means there is no other person who can or is claiming the student as a dependent on their tax return.
Students can be considered independent if they are at least 24 years old, married, have a dependent child, or are a member of the armed services. These are just a few of the qualifying situations.
Independent students are managing the financial aid process for their college years on their own, in theory, and therefore may need additional help through federal loans.
While less restrictive than dependent students’ borrowing limits, there are still limitations imposed on independent students who qualify for financial aid. The restrictions are as follows:
|Year in school||Annual borrowing limit, subsidized loans for independent students||Annual borrowing limit, unsubsidized loan for independent students|
|First-year undergraduate students||$3,500||$9,500 (including subsidized)|
|Second-year undergraduate students||$4,500||$10,500 (including subsidized)|
|Third- and fourth-year students||$5,500||$12,500 (including subsidized)|
|Aggregate loan limits||$23,000||$57,500 (including subsidized)|
It is important to note that all graduate students are considered independent students. Their federal student loan limits are as follows:
|Year in school||Annual borrowing limit, subsidized loans||Annual borrowing limit, unsubsidized loans|
|Graduate or professional student||N/A||$20,500|
|Aggregate loan limits (including loans received for undergraduate studies)||$65,500||$138,500|
Parent PLUS and Grad PLUS loan limits
When federal Direct Loans are not enough to cover the full cost of attendance, graduate students may qualify for a Grad PLUS Loan. Parents of an undergraduate student may qualify for a Parent PLUS Loan.
Grad PLUS and Parent PLUS Loans differ from Direct Loans in that they are only available to graduate-level students and parents of students who do not have an adverse credit history.
The loan limits for Grad PLUS and Parent PLUS Loans also differ from Direct Loans. There is no annual limit as a set dollar amount, but students or parents may not borrow more than the total cost of attendance, less any other financial aid received.
Undergraduate Federal Student Loan Limits
|Year||Dependent total amount||Independent total amount|
|First year||$5,500 ($3,500 subsidized, $2,000 unsubsidized)||$9,500 ($3,500 subsidized, $6,000 subsidized)|
|Second year||$6,500 ($4,500 subsidized, $2,000 unsubsidized)||$10,500 ($4,500 subsidized, $6,000 unsubsidized)|
|Third year and beyond||$7,500 ($5,500 subsidized, $2,000 unsubsidized)||$12,500 ($5,500 subsidized, $7,000 unsubsidized)|
Total subsidized and unsubsidized loan limits over the course of your entire education include:
- Dependent: $31,000 ($23,000 subsidized, $7,000 unsubsidized)
- Independent: $57,500 ($23,000 subsidized, $34,500 unsubsidized)
Both dependent and independent students can borrow $23,000 in subsidized loans, but unsubsidized loans allow independent students to borrow more.
Graduate Federal Student Loan Limits
If you’re a graduate or professional student, you’re not given the option to be a dependent student for purposes of federal financial aid. All graduate students are considered independent and aren’t eligible for subsidized loans.
Instead, graduate students can borrow as much as $20,500 in unsubsidized loans annually and $138,500 total, including undergraduate loans.
What affects federal student loan limits?
While federal student loans are a great first choice for student borrowers, you may not be able to get all the funding you need.
The loan maximum is affected by a variety of factors, including the student’s personal situation and even the other sources of funding that the student receives, such as scholarships, grants, or private student loans.
Federal student loan limits can be affected by a student’s:
- Dependency status
- Year in school
- Marital status
- Enrollment status (full-time versus half-time)
These will impact how much federal financial aid you can receive through subsidized or unsubsidized loans. Each of these factors also influences what you are eligible to receive and may indicate a need for supplemental financing through private student loans or other funding sources.
Do federal student loan limits change?
There are two ways in which you can expect federal student loan limits to change. The first thing to know is that federal loan limits increase as a student advances in school. So, a third-year student will have more available federal loan funding than a second-year student, who will have a higher limit than a first-year student.
Additionally, the federal government adjusts the loan limits periodically, taking into consideration factors like inflation.
Can you appeal for a larger loan amount?
If you need to borrow more in federal loans than the current limit, you may be able to request a higher amount. This is often allowed for graduate students in certain healthcare fields and may grant you access to as much as $26,667 in additional federal loans for that year.
If you need to borrow more because you have been denied certain federal loans or are limited in your borrowing ability due to your FAFSA, you may be able to appeal that decision. This process is initiated through your school’s financial aid office and involves writing a letter explaining your appeal and any extenuating circumstances you want the Department of Education to consider.
What Happens If You Hit Federal Loan Limits?
If your cost of attendance exceeds what you can borrow in federal student loans, you may not have enough cash on hand to cover the extra costs. If you’re worried about not having enough money to pay for school, you have a few options, including:
Working part-time. Find a job that lets you work non-traditional hours so you can pay for school. You can look on- or off-campus, depending on your living situation and transportation options. Consider a side-hustle—like delivering groceries, tutoring or freelancing—to cover your extra schooling costs.
Requesting payment assistance. Many schools require payment in full, whether that comes from your lender or you. If you can’t pay your outstanding bill, talk to your school’s financial aid office about a payment plan, like making monthly payments instead of one lump-sum payment. Also inquire about emergency grants or interest-free loans, which vary by school but might be available based on your need.
Switching schools. Cost of attendance varies by each school. Since every institution has different service fees, you might pay more at a private or big-name school compared to community colleges, which tend to have fewer fees. If you can, consider attending local colleges for the first couple years and then transferring to your school of choice to complete your bachelor’s degree.
Using private student loans. If you’ve exhausted all your federal borrowing options, you may want to look into using private student loans. These are available through banks, credit unions and online lenders and usually require a credit check for approval. If you don’t have a strong enough credit standing on your own, you may need to enlist the help of a co-signer—like a parent—to help you qualify or get a lower interest rate. How much you can borrow is partly based on your credit score.
Tapping into family resources. If you can, ask relatives if they can pitch in to help pay for school. This includes getting a loan from a loved one or having them make tuition payments on your behalf. While not every family can afford the extra cost, you may have some relatives that can give you a little extra money so you can avoid borrowing more in loans.
Private Student Loan Limits
Since private student loans are offered by many different lenders, there is no general limit to how much you can borrow. Banks, credit unions and online lenders all have their own criteria. This means you’ll need to compare lenders, interest rates and repayment terms before applying for a private student loan.
Your private student loan limit is based on your creditworthiness and sometimes your chosen degree. Many lenders will approve you for your entire cost of attendance, while others have a lifetime loan amount you can borrow, similar to federal student loan limits.
Loan Limits for Undergraduate Students
The loan limits for undergraduate students vary based on their dependency status (dependent or independent) and academic year. Dependent students can typically borrow more than independent students. Here are the annual and aggregate loan limits for Direct Subsidized and Unsubsidized Loans for undergraduate students:
Dependent Undergraduate Students:
- First-Year (Freshman): $5,500 (maximum $3,500 subsidized)
- Second-Year (Sophomore): $6,500 (maximum $4,500 subsidized)
- Third-Year and Beyond: $7,500 (maximum $5,500 subsidized)
- Aggregate Limit (total combined Subsidized and Unsubsidized Loans): $31,000 (maximum $23,000 subsidized)
Independent Undergraduate Students (and dependent students whose parents are unable to borrow PLUS Loans):
- First-Year (Freshman): $9,500 (maximum $3,500 subsidized)
- Second-Year (Sophomore): $10,500 (maximum $4,500 subsidized)
- Third-Year and Beyond: $12,500 (maximum $5,500 subsidized)
- Aggregate Limit (total combined Subsidized and Unsubsidized Loans): $57,500 (maximum $23,000 subsidized)
Loan Limits for Graduate and Professional Students
Graduate and professional students have different borrowing limits, as they are not eligible for Direct Subsidized Loans. Here are the annual and aggregate loan limits for Direct Unsubsidized Loans for graduate and professional students:
- Graduate and Professional Students: $20,500 (unsubsidized only)
- Aggregate Limit (total combined Unsubsidized Loans): $138,500 (including loans as an undergraduate)
Loan Limits for Parent Borrowers (Direct PLUS Loans)
Parent borrowers, such as parents of dependent undergraduate students, can apply for Direct PLUS Loans. The loan limit is determined by the student’s cost of attendance and other financial aid received. Parent borrowers can borrow up to the full cost of attendance minus other financial aid.
Federal student loan limits are in place to ensure responsible borrowing and manageable debt for students pursuing higher education. By understanding the loan limits and choosing federal student loans wisely, students can access essential financial support without being burdened by excessive debt. It is essential to plan carefully and explore other financial aid options, such as grants and scholarships, to supplement the cost of education effectively. By making informed borrowing decisions, students can embark on their academic journey with confidence, focusing on their studies and future success.
Frequently Asked Questions (FAQs)
How much in student loans can I get per semester?
Loan limits are determined on a per-year basis, even though they might be disbursed each semester. In most cases, your college processes your federal loan money at the start of each school term. Schools that don’t follow traditional terms must disburse loan money at least twice during the school year.
For example, if you qualify for $3,500 in subsidized loans as a first-year undergraduate student, you’ll get half of that ($1,750) each semester.
How much in student loans can I get per year?
The amount you can borrow in federal student loans depends on your year, dependency status, and the type of loans you receive. For instance, first-year undergraduate dependent students can receive as much as $5,500 (but only $3,500 can be subsidized). Third-year students can receive up to $7,500 total, only $5,500 of which can be subsidized.
How much in student loans can I get for part-time?
You can get student loans and financial aid as a part-time student. How much you receive in federal loans is based on your cost of attendance, how many credits you’re taking and the type of student you are. You’ll need to be enrolled at least half-time—which varies by school—to qualify for federal aid. Some private lenders may offer loans to students enrolled less than half-time.
What is the undergraduate student loan limit?
Undergraduate students who qualify as independent can borrow as much as $57,500 in federal student loans; dependent undergrads can borrow up to $31,000. This includes a mix of direct subsidized and unsubsidized loans.
If your cost of attendance exceeds these amounts, you can tap into private student loans to cover funding gaps. Many private student loans will cover the full cost of attendance after other aid—including federal student loans—has been applied.
How much in student loans can I get for graduate school?
How much graduate students can borrow depends on the type of loans. For direct unsubsidized and subsidized loans, you can get as much as $138,500 as a graduate or professional student—but this figure includes your entire schooling, including your time as an undergrad.
Graduate students are also eligible for federal PLUS loans. These carry higher interest rates and fees than other types of federal aid, but you can borrow up to your school’s entire cost of attendance.
Private lenders typically also allow graduate students to borrow up to their school’s certified cost of attendance.