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Student Loan Borrowing Limits for Federal and Private Loans

Federal student loan borrowing limits vary by year of school, while private loans follow a different set of rules for maximum loan size.

Written By: Michael P. Lux, Esq.

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Understanding the maximum possible student loan amounts can be complicated. Private loans have different rules than federal loans, and federal loans have different rules for different students and several exceptions and loopholes.

This article will break down the annual (yearly) and total lifetime limits for student loan borrowing. To keep things as simple as possible, we will cover the limits of each loan type in the order of typical borrower preference. For example, subsidized government loans are better than most other loans, so we will cover the subsidized limits first.

What this article will not cover is how much someone should borrow. In most cases, it is possible to borrow way more money for school than what is smart. We typically suggest that total borrowing not exceed your expected starting salary, but today the emphasis will be placed on what can be done.

Subsidized Student Loan Borrowing Limits

The best type of student loans are federal subsidized loans. These loans come with all the standard perks of federal loans and include the added benefit of the government paying the interest accrued during school.

Qualifying for subsidized loans requires completing the FAFSA. Students must demonstrate financial need to qualify for a subsidized loan. These loans are not available to graduate students.

The borrowing limits have both a yearly limit as well as a total borrowing limit.

YearMax Amount
First-Year Undergraduate$3,500
Second-Year Undergraduate$4,500
Third-Year Undergraduate and Beyond$5,500
Total Borrowing$23,000

Unsubsidized Loan Limits

All students who complete the FAFSA are eligible for Unsubsidized student loans, regardless of financial need. One key limitation is that the borrowing plus other financial aid cannot exceed the Estimated Cost of Attendance (more on this concept later in the article).

The unsubsidized loan limits include subsidized borrowing as well. For example, First-Year Undergraduate students are allowed to borrow up to $5,500. If that student is getting $3,500 subsidized, the most they can borrow is $2,000 unsubsidized. Put another way; the following table lists the combined maximum amount of unsubsidized and subsidized loans that can be borrowed. Having financial need means the government may cover the interest on loans during school, but it does not allow students to borrow extra.

Limits on borrowing are higher for independent students. All graduate students are considered to be independent for this calculation. Dependent students can get the larger loans reserved for independent students if their parents are unable to qualify for a Parent PLUS Loan.

YearDependent StudentsIndependent Students
First-Year Undergraduate$5,500$9,500
Second-Year Undergraduate$6,500$10,500
Third-Year Undergraduate and Beyond$7,500$12,500
Graduate StudentsNot Applicable$20,500
Total Borrowing$31,000$57,500 for undergraduates
($138,500 for graduate students)

Note: The graduate borrowing limit includes combined undergraduate and graduate school loans.

PLUS Loan Borrowing Limits

Students who need to borrow beyond what is offered by the subsidized and unsubsidized loans can also borrow PLUS loans. PLUS loans are issued by the federal government and carry many similar perks to the other federal loans, such as income-driven repayment plans. However, PLUS loans typically have higher interest rates and loan origination fees, thus making them more expensive to borrow. All PLUS loan borrowers must also pass a minimal credit check where the government will look to verify that the borrower does not have an Adverse Credit History.

For undergraduates, PLUS loans are issued to parents. This means that the parents are the ones technically responsible for paying back the loan per the terms of the contract. Graduate students must borrow PLUS loans under their own name.

Unlike the other federal student loans, there is no set limit on PLUS loan borrowing. Instead, borrowers can borrow up to the Estimated Cost of Attendance minus other financial assistance received. The idea behind this formula is to allow borrowers to borrow as much as necessary to attend school, but nothing more.

Additionally, there is no aggregate borrowing limit. Thus, students can borrow as much as necessary for as long as they are in school.

Understanding the Estimated Cost of Attendance

Each year colleges generate a figured called the Estimated Cost of Attendance. Most students will find this figure rather generous in that it overstates how much it will actually cost to attend school. Students with families or dependants may find that the Estimated Cost of Attendance understates their true cost of attending school.

For students attending at least half-time, the Estimated Cost of Attendance includes the following:

  • tuition and fees;
  • the cost of room and board (or living expenses for students who do not contract with the school for room and board);
  • the cost of books, supplies, transportation, loan fees, and miscellaneous expenses (including a reasonable amount for the documented cost of a personal computer);
  • an allowance for child care or other dependent care;
  • costs related to a disability; and/or
  • reasonable costs for eligible study-abroad programs.

Yearly borrowing limits usually start with the Estimated Cost of Attendance, but grants, scholarships, and other financial aid reported by the school will also reduce the yearly borrowing.

Private Student Loan Borrowing Limits

The first limitation on private student loan borrowing is the required credit check. Many full-time students will struggle to get approval without finding a co-signer who has a decent credit score and debt-to-income ratio.

Like Federal PLUS loans, the yearly limit on private loan borrowing is the Estimated Cost of Attendance minus other financial aid. Financial Aid offices will make sure that the combined scholarships, grants, and student loan borrowing stays under the yearly Estimated Cost of Attendance.

Additionally, most private student loan lenders impose a lifetime borrowing limit. This limit is typically around $120,000, but it can vary greatly from lender to lender.

What If I Need to Borrow More?

Students that need to borrow money beyond the yearly estimated cost of attendance will find securing additional funds to be a challenge.

Because student loan rules limit borrowing to the Estimated Cost of Attendance, students who need additional funds will typically have to secure a personal loan for extra money. These unsecured personal loans are flexible in that they allow borrowers to pay down credit card debt, buy a car, or be used for any other purpose. This flexibility comes at a cost, as interest rates are often higher on personal loans than they are for student loans. However, opting for a personal loan with a lender such as SoFi usually is less expensive than racking up credit card debt.

That being said, all students would be wise to remember that the limits of smart borrowing are often far more strict than the limits of possible borrowing.

Further Reading and Resources:

Federal Student Aid Article on Subsidized and Unsubsidized Loans
Department of Education Page on Student Aid Calculations
PLUS Loan and Parent PLUS Loan Frequently Asked Questions
Understanding and Navigating Financial Aid Offers from Colleges

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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