What is the maximum student loan amount you can borrow?

April 14, 2020

When it comes to borrowing for college, federal student loans should usually be your first stop. But you can’t borrow that much, since the federal government has a maximum student loan amount of $31,000 for dependent undergraduate students and $138,500 for graduate students.

Here’s what to know about federal student aid limits and what to do if you reach that limit.

What is the maximum student loan amount?

Federal student loan limits are based on several factors:

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  • Type of education: undergraduate or graduate
  • Student status: dependent or independent
  • Annual vs aggregate: per year vs. by lifetime

This chart from the Pennsylvania State University Student Aid Office details the limits based on your situation:

Dependent undergraduate student Dependent Undergraduate Student with Parent PLUS Loan Rejection Independent undergraduate student Graduate student or professional license
First year (0-29 credits) $5,500. A maximum of $3,500 can be funded. $9,500. A maximum of $3,500 can be funded. $9,500. A maximum of $3,500 can be funded. $20,500
Second year (29.1-59 credits) $6,500. A maximum of $4,500 can be funded. $10,500. A maximum of $4,500 can be funded. $10,500. A maximum of $4,500 can be funded. $20,500
Third, fourth and fifth years (59.1+ credits) $7,500. A maximum of $5,500 can be funded. $12,500. A maximum of $5,500 can be funded. $12,500. A maximum of $5,500 can be funded. $20,500
Maximum total loan amount $31,000. A maximum of $23,000 can be funded. $57,500. A maximum of $23,000 can be funded. $57,500. A maximum of $23,000 can be funded. $138,500. The graduate debt limit includes direct loans received for undergraduate studies.

In addition to these student loan limits, there are two other limitations to be aware of:

  • You cannot exceed the cost of attending your school; in other words, you cannot take out more loans than you actually need.
  • You can receive direct subsidized loans only for your maximum eligibility period, which is “150% of your published program duration” – for example, six years for a four-year bachelor’s degree or three years for an undergraduate degree. two-year partner.

What to do if you reach the maximum student loan amount

If you’ve borrowed the maximum student loan amount—or are close to it—here are four steps you can take:

1. Talk to your financial aid office
2. Switch to part-time
3. Dip into your emergency or retirement savings
4. Consider private student loans

1. Talk to your financial aid office

The federal government is not the only place offering help; states and colleges also have programs.

So talk to your financial aid office and ask if there is anything they can do. Perhaps he can offer help based on need or merit or recommend a local scholarship program. He might also be able to help you find help for your condition.

2. Switch to part-time

If you find you’re close to reaching your student loan limit, lowering your course load will lower your costs and give you time to work while attending school. By doing so, you will hopefully be able to cover your tuition fees without taking out additional loans.

As for the federal loans you’ve already taken out? If you are enrolled in part-time courses, your loans will remain suspended, meaning you will not have to repay them.

If they are subsidized loans, the government will cover the interest. But if it’s unsubsidized loans, you might want to start making minimum payments to avoid soaring interest charges.

3. Dip into your emergency or retirement savings

While it’s never ideal to spend your savings, sometimes it is necessary. If you have an emergency fund, you could use some of that money to cover tuition. Just be sure to replace what you removed.

If you’ve been in the workforce for a while, you could tap into your retirement savings to pay for your college tuition. For example, if you’ve had a Roth IRA open for more than five years, you can withdraw contributions for your education without penalty or tax.

Think twice before doing so, however. The best thing to do with retirement investments is to let them rest and grow.

4. Consider private student loans

A final option to consider is private student loans. Since they are not offered by the federal government, they are not subject to traditional student loan limits.

You can get private student loans from a variety of lenders, including big physical banks and small online start-ups.

Although these loans have fewer restrictions than federal loans, their interest rates are higher. And you’ll probably need a co-signer (unless, of course, you’ve been in the workforce before and established your own credit).

Before taking out additional loans, make sure you understand the terms and how much you’ll end up paying in the long run. (You can use our student loan payment calculator to work out the numbers.)

Taking an additional $30,000 at an interest rate of 9.00%, for example, will result in monthly payments of $380 upon graduation and a total of $15,603 in interest over 10 years. Add that to the federal loans you already have, and you could be overwhelmed with debt when you graduate.

If you’ve reached the maximum student loan amount, don’t panic. Take a few deep breaths and think carefully about your options.

And remember: whatever you take, you have to pay back.

Rebecca Safier contributed to this report.

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