Understanding Your Student Loan Limits

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Updated on Monday, October 1, 2018

There’s a limit to how much you can borrow with federal student loans, and it can depend on your year at school, the degree you’re pursuing and the type of loan you want to use. Knowing which student loan limits apply to you can help you create an effective and workable plan for how you’ll pay for college.

Current students may be able to borrow several types of students loans from the U.S. Department of Education’s Direct Loan program. These include subsidized and unsubsidized direct loans for undergraduate students, and unsubsidized direct loans for graduate and professional students.

The subsidized and unsubsidized direct loans have annual and aggregate student loan limits.

These limits partially depend on your year in school, and they’re for each academic year rather than calendar year. If your program is shorter than a full academic year, your loan limit will be prorated.

The aggregate loan limits include the federal student loans taken out for undergraduate and graduate studies through the Direct Loan program and Federal Family Education Loan (FFEL) loan program. Once you reach your aggregate limit, you can’t take out additional subsidized or unsubsidized direct loans unless you pay down your outstanding federal student loan debt.

Annual and aggregate student loan limits for subsidized and unsubsidized direct loans

Year

Dependent students

Independent students

First-year undergraduates

$5,500 per academic year, including up to $3,500 in subsidized direct loans

$9,500 per academic year, including up to $3,500 in subsidized direct loans

Second-year undergraduates

$6,500 per academic year, including up to $4,500 in subsidized direct loans

$10,500 per academic year, including up to $4,500 in subsidized direct loans

Third-year undergraduates and beyond

$7,500 per academic year, including up to $5,500 in subsidized direct loans

$12,500 per academic year, including up to $5,500 in subsidized direct loans

Graduate students

N/A

$20,500 per academic year, only unsubsidized loans

Aggregate loan limits

$31,000 overall, including up to $23,000 in subsidized loans

$57,500 overall for undergraduates, including up to $23,000 in subsidized loans

$138,500 overall (including undergraduate loans) for graduate and professional students, including up to $65,000 in subsidized loans

A student’s dependency status isn’t the same as being a dependent on a parent’s tax return. It can depend on a variety of situations, including the type of degree the student is pursuing. You can follow the questionnaire on StudentAid.ed.gov to determine your dependency status.
If a dependent student’s parent isn’t able to take out a PLUS loan to pay for the student’s educational expenses, the student’s annual and aggregate loan limits increase to the independent student limits.

Time limits for subsidized direct loans

In addition to the annual and aggregate loan student loan limits for subsidized direct loans, there is a maximum time period for borrowers — 150 percent of your program’s published length. For example, if you’re in a four-year program, you can take out subsidized direct loans for up to six years.

Transferring to a program with a different published length could change your maximum eligibility period, and the subsidized direct loans you already took out will count toward your new limit.

Once you’re outside your eligibility period, the Department of Education will no longer pay the interest on your loans (i.e., you lose the subsidy). This applies even if you’re still in school and pursuing a degree.

Cost of attendance limits

Your specific loan limit may be lower than the maximum allowed student loan limits based on your school’s cost of attendance (COA) and your family’s finances.
Undergraduate subsidized direct loans are need-based loans, and your annual limit is capped base on your “financial need.” To determine your financial need for the year, subtract your expected family contribution (EFC), which is based on the information you submitted with your Free Application for Federal Student Aid (FAFSA), from your school’s COA.

Unsubsidized loans aren’t need-based, but your annual limit is still capped by your school’s COA minus the financial aid you’ve been awarded. The other aid could include scholarships, grants and other loans. The formula applies to unsubsidized direct loans for undergraduate and graduate students, as well as PLUS loans for graduate students and parents of undergraduates.

Increased student loan limits for health care degrees

Students pursuing select health profession degrees may be eligible for higher annual and aggregate unsubsidized direct student loans limits. To qualify, your program must be accredited by a specific accrediting agency — you can find the list on page 588 of the Federal Student Aid Handbook.

Increased unsubsidized loan limits for health care degrees

Program

For programs with a 9-month academic year

For programs with a 12-month academic year

Doctor of Allopathic Medicine
Doctor of Osteopathic Medicine
Doctor of Dentistry
Doctor of Veterinary Medicine
Doctor of Optometry
Doctor of Podiatric Medicine
Doctor of Naturopathic
Medicine, Doctor of Naturopathic

Additional $20,000 per year ($40,500 total)

Additional $26,667 per year ($47,167 total)

Doctor of Pharmacy
Graduate in Public Health
Doctor of Chiropractic
Doctoral Degree in Clinical Psychology
Masters or Doctoral Degree in Health Administration

Additional $12,500 per year ($33,000 total)

Additional $16,667 per year ($37,167 total)

The aggregate loan limit for students pursuing one of these health care degrees is increased to $224,000 in combined unsubsidized and subsidized loans.

If your program doesn’t have an academic year with nine or 12 months, your additional loan limit will be prorated to align with your program’s length.

PLUS loan limits

PLUS loans are a type of direct loan available to graduate and professional students, and to parents of undergraduate students. The PLUS loans differ from unsubsidized and subsidized direct loans in a few ways:

  • There’s a credit check. Borrowers with an adverse credit history may not qualify for a PLUS loan. An adverse credit history doesn’t have refer to a specific credit score but may include defaulting on a loan or having a vehicle repossessed within the last five years. Subsidized and unsubsidized direct loans don’t require a credit check.
  • There’s no specific annual loan limit. You can borrow up to your school’s COA minus the financial aid you already received.
  • There’s no aggregate loan limit. Eligibility for PLUS loans isn’t limited by your current student loan balances.
  • The costs are higher. PLUS loans have a higher disbursement fee and interest rate than subsidized and unsubsidized direct loans.

How to handle the cost of college with student loan limits

Although you can borrow up to the maximum loan limits with federal student loans, you may want to start your college funding by looking for ways to pay for school without borrowing money. If that’s not possible, and you reach your federal student loan limits, there may be additional options to consider.

1.Look at the cost and student loan limits when deciding on a school

If you’re still thinking about where you might apply, or you’re comparing financial aid award letters from different schools, you may want to consider your overall cost when deciding which school to attend.

Each school has a net price calculator you can use to see the estimated cost to attend the school after your potential scholarships or grants are taken into account. The net price may include estimated costs for room and board, personal expense and travel.

These ancillary costs could add up. For example, a college in New York City may be much more expensive than one in a smaller city or town due to the difference in living expenses. Likewise, attending college close to home could help you save money each time you want to travel home to visit friends or family.

If you’ve already received financial award letters, the letters will list the school’s cost of attendance, your expected family contribution and your loan offers. It will also show you which grants or scholarships you’ll receive this year, which could make an otherwise too expensive school a good option. However, keep the potential long-term costs in mind as you may not receive the same grants or scholarships next year.

2.Apply for grants and scholarships

Grants and scholarships can be one of the best ways to pay for school since you generally won’t need to repay the money you receive. You must fill out and submit a FAFSA each year to be eligible for federal grant and scholarship programs. However, you can also apply for additional opportunities on your own.

You can find scholarships and grants online or by asking high school or college counselors. Some employers also offer scholarships to their employees (or employees’ children), and you may be eligible for opportunities based on all sorts of affiliations, including where you live, what you want to study, your religion, ethnicity or heritage.

While some scholarship or grant applications can be difficult and time-consuming, remember that the work you’re putting in now could save you a lot of money later. Also, don’t give up on applying. Scholarships and grants are available to a variety of applicants, and you may qualify whether you’re in high school or in a Ph.D. program and regardless of your income.

3. Consider a PLUS loan

A parent of an undergraduate student may want to take out a federal PLUS loan to help pay for the student’s educational costs. As the borrower, the parent is fully responsible for repaying the loan and can’t transfer the federal loan to the student. If the student leaves school, builds credit and is able to qualify for private student loan refinancing, some lenders will let the student include a parent PLUS loan into the refinancing to transfer the debt obligation.

If the parent isn’t eligible for PLUS loans, or applies and gets denied, the student may be eligible for additional unsubsidized student loans for the year.

Graduate and professional students who can’t meet their funding needs with unsubsidized students loan may want to consider PLUS loans as well. However, because PLUS loans have a higher disbursement fee and interest rate than unsubsidized direct loans, you may want to maximize your unsubsidized direct loan borrowing before taking out a PLUS loan. In some cases, a private student loan may also be less expensive than a federal PLUS loan.

4. Explore private student loan options

The federal government isn’t the only student loan lender. Private lenders, including banks, schools, states and online lenders offer private student loans to students and parents of students.

Private lenders may allow you to borrow up to your school’s cost of attendance, which could help cover a funding gap. However, private student loans are credit-based loans, and your eligibility, terms and loan limits can depend on a variety of factors, including your credit history, credit score, income and other outstanding debts.

Because federal student loans may offer more favorable rates, terms, repayment options and access to forgiveness programs, you may want to maximize your federal borrowing before turning to private loans. If you do decide to take out private student loans, compare your loan offers from different lenders as each may give you different rates, terms and benefits.

5. Earn money to pay for school

Finding a part-time job during the school year, and continue with part-time or full-time work during the summer and holidays, could help you tackle some of your educational expenses without borrowing money.

If you receive a work-study award as part of your financial aid, you may be able to find a job on campus, with a local nonprofit or at an organization that works in a field that’s related to your major. A work-study award can give you a leg up, as the award will cover part of your paycheck, but you’ll still need to apply and interview for the job.

6. Find ways to cut costs

Your tuition and fees may be fixed costs for the year, but other expenses are variable and looking for money-saving options could limit how much you need to borrow.

For example, moving off campus might save you money compared with on-campus housing, especially if you also start making your own meals and don’t have to pay for a meal plan. Other expenses may not be as significant, but the savings from using student discounts, looking for free entertainment and buying used textbooks can still add up over the years.

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