How Much Can You Borrow in Student Loans?

Mentor helping student pointing at laptop

The Balance / Getty Images

You might have a high school student at home looking at Ivy League schools or big-name universities as their next educational step, and it's exciting to have lofty ambitions. However, when it comes to colleges, high ambitions often equate with elevated price-tags.

Some students might receive a great financial aid package that covers most of their educational costs due to their academic, athletic, or artistic capabilities. Other students might have parents who can afford to pay for college.

For most students though, attending college usually involves borrowing money through federal or private student loan programs. While loans offer the advantage of helping meet educational goals, taking on too much debt can have negative financial consequences in the long-term.

Before you decide how to proceed, it's important to pay attention to federal student loan limits and decide whether you need to supplement with private student loans.

Key Takeaways

  • The amount of federal financial aid you are eligible to receive varies depending on what year of school you're in as well as your dependency status.
  • Graduate and independent students are eligible for more aid than undergrads and dependent students.
  • Undergrads in their first year of school can borrow up to $5,500 in federal student loans, $6,500 in their second year, and $7,500 in the third and subsequent years.
  • There is a lifetime cap of $31,000 for dependent undergraduates, $57.500 for independent undergrads, and $138,500 for graduate and professional students.

Federal Student Loan Limits

There are two types of student loans available: federal and private. It's usually best to maximize the amount of money borrowed through federal student loans first before turning to private lenders, as federal loans typically have more favorable terms.

Below is chart detailing the federal loan limits for dependent and independent students.

Undergraduate Students

Federal student loans are available to most undergraduate students that meet the Department of Education's basic eligibility requirements.

There are two types of undergraduate student loans available, subsidized and unsubsidized.


These loans are based on need, and the government covers the interest involved. For dependent undergraduate students who qualify, up to $3,500 of the total borrowed in the first year of college can be subsidized, $4,500 subsidized in the second year, and up to $5,500 in following years.


Anyone can take out these loans, regardless of the level of need. However, interest begins accruing on the amount borrowed immediately.

There is a lifetime cap of $31,000 on federal student loans for dependent undergraduates, and no more than $23,000 of the total can be subsidized. For independent students, or dependent students whose parents do not qualify for Parent Plus Loans, the lifetime limit is $57,500.

Graduate Students

There are no subsidized loans for graduate students, but they can receive up to $20,500 each year in Direct Unsubsidized Loans. Graduate students may be eligible to borrow the remainder of their college costs in Direct PLUS Loans, subject to the satisfactory completion of a credit check.

For graduate federal student loans, the lifetime limit is $138,000. It's important to note that this lifetime limit also includes the loans received for undergraduate study.


If your child still needs help covering the college funding gap, it's possible for you to borrow money through PLUS Loans to cover the remainder of college costs that are not covered by other financial aid. You do need to complete a credit check that shows no adverse items.

Private Student Loans

Another way to get the funding you need, if you run out of federal student loan options, is to get private student loans.

Keep in mind, though, that private lenders have different, potentially higher interest rates and different payment terms that can affect long-term financial liquidity.

Depending on your situation, though, they can actually be a better option than PLUS loans. If you have good credit and can qualify for a lower interest rate, a private student loan can be a reasonable choice. Carefully consider your options, though, and realize that, in many cases, private lenders require students to have cosigners with good credit.

How Much Money You Should Borrow

This is often a very personal question to answer and one that has to be carefully considered by each family. Try not to let the emotion of wanting to attend a particular college override the reality of the ability to pay for it. Keep the following factors in mind when deciding how much money to borrow through student loans.

How Much Will You Borrow in Total?

Find out how long it takes most students to get an undergraduate degree from the college under consideration, and then determine if you'll need a graduate degree to enter a particular profession. This should give you a rough idea of how much you will need to borrow over the four to ten years, or more, that it can take to complete an education.

Also, pay attention to items like scholarships, 529 savings, and whether your student can work during school to help reduce how much they need to borrow.

How Much Will You Have To Repay?

The federal government provides a repayment estimator that will give you a good idea of the monthly payments that will be required after graduation.

Remember that you'll have to pay interest, and the longer you have the debt, the more you'll end up paying overall. With subsidized loans, the student gets a break on the interest for a short period of time, but once they are out of school, those costs start adding up.

Who Will Make the Payments?

Some parents are happy to take on student loans, while others want their students to assume the responsibility. Compare the estimated payments against the expected salary of whoever is repaying the loans.

Is it Worth It?

If the estimated payments will cause a financial strain, the family has to consider its options. The student may want to attend a lower-cost community college to complete their lower-division or general education requirements and then transfer to a university, or attend another college completely. The family can also pull together to earn additional money, or the student can intensify the search for scholarships to locate additional funding.

How To Apply for Federal Student Loans

If you decide that federal student loans are needed to help cover the cost of college, you need to fill out the Free Application for Federal Student Aid (FAFSA). The information from the FAFSA will be sent to the schools on your list and they will use the information to put together a financial aid package.

The package will likely consist of federal loans, any scholarship money awarded to your student, grant money, if available (depending on your student's specific qualifications), and a certain amount to be earned through on-campus employment for the student.

Once you receive the financial aid package, you'll have an idea of what you need to cover with private student loans or other sources of college funding.

In the end, it's important to understand what matters most to your family, and how much debt your student can afford to have as a result of their education.

Frequently Asked Questions (FAQs)

What is the federal student loan limit?

Undergraduate students can borrow between $5,500 and $12,500, depending on their dependency status, and graduate students can borrow up to $20,500 in each academic year.

There is an aggregate, lifetime limit of $31,000 for dependent undergraduates, $57,500 for independent undergraduate students, and $138,500 for graduate students.

What's the difference between subsidized and unsubsidized student loans?

Subsidized loans do not accrue interest while you are enrolled at least half-time in school and not until the six month grace period is over, while unsubsidized loans begin accruing interest immediately. There are also different limits to each type of loan. For example, the limit for both subsidized and unsubsidized loans for first-year undergraduates is $5,500, with no more than $3,500 in unsubsidized loans.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Student Aid. "Direct Loan Periods and Amounts."

  2. Department of Education. "PLUS Loans for Graduate or Professional Students."

Related Articles