How Much in Student Loans Can I Get?
Student loans give students a way to pay for college when other financial aid may fall short. However, there are limitations to how much you can borrow and, more importantly, how much you should borrow.
If you are one of the 70% of college students taking out some form of student loan, it’s helpful to know you have two main options: Federal and private student loans. Each type can play a role in paying for school and each have their own borrowing limits.
Before you investigate how much you can get, the first question you need to ask yourself is, “How much do I need to borrow for college?”
How Much Should I Borrow?
While you can borrow thousands of dollars via student loans in order to pay for your education, there’s the question of how much you should actually borrow. There’s varying schools of thought when it comes to this issue, including suggestions that you shouldn’t take out more than what you anticipate will be your first year’s salary. In other words, if you’re likely to make $40,000 straight out of college, you don’t want to borrow more than that amount. To get a better idea of this, you can contact your school’s career counselors who can guide you through salaries in your field.
Other suggestions and tips when it comes to the amount you should consider borrowing are to estimate the full cost of your college and only use the loan for school essentials, such as tuition and books. No matter what you decide to take out, it’s important to keep track of your finances and your debts along the way so you’ll know how much you’ll owe when the time comes to make payments.
Federal Student Loans
Federal loans, with average interest rates of 5.8 percent, are an option for those who need assistance with paying for school. Federal loans — which are split into direct subsidized loans, direct unsubsidized and direct PLUS — tend to have flexibility when it comes to things like repayment, and applicants aren’t required to meet any credit requirements.
For undergraduate students, the yearly maximum amount of money available for federal loans is between $5,500 to $12,500. There’s also what’s known as student loan limits, which determine how much you can borrow for each school year and overall. (For dependent undergraduate students, the overall amount caps at $31,000, and a maximum of $23,000 may be subsidized.)
Even though you won’t need to pay off your federal loans until after you’ve graduated, it’s important to keep track of how much you have borrowed and how much you’ll need to have saved to ensure you’re making payments on time.
You can learn more about federal student loans and how to complete your Free Application for Federal Student Aid (FAFSA) here.
Private Student Loans
While federal loans are provided by the government, private student loans are available to students (and sometimes parents) by banks, credit unions, and lenders. These loans can come in handy when you need more money than what the federal loan limits provide.
Students often don’t have sufficient credit history or income to be approved on their own and will most likely need a creditworthy cosigner to get a loan. A cosigner agrees to share repayment responsibility for the student loan with the student.
The amount an undergraduate student is approved for depends on the lender. Some private loans can lend starting at $1,000, which is where our private student loans start, while maximums can go as high as $200,000. According to U.S. News & World Report, “The maximum loan limits may be higher if you’re going to graduate, professional or medical school, reflecting these programs’ potentially higher cost.”
Private loans which offer both fixed and variable interest rates and flexible loan terms (up to 15 years) can be paid while you are in school, or when you have completed school, or sometimes both, so budgeting and knowing what you and your cosigner can pay is crucial. It’s also recommended that you be very thoughtful and only borrow what you need from a private loan.
Calculate Your Own Student Loan
Try our easy-to-use (and free) student loan calculator to get a more detailed picture of what a private student loan may mean for you. Using a free calculator is a great way to estimate monthly payments, how you can save in the long run and navigate conversations paying for future your education.