How Much Can I Get In Student Loans? 

This blog contains links to external pages and resources not managed by Earnest

It’s common knowledge that the cost of college and higher education is pricey. But do you know just how expensive it really is?

Recent data from U.S. News & World Report states that the average cost of tuition and fees is $10,662 for in-state students at public schools, $23,630 for out-of-state students at public universities, and a whooping $42,162 at private colleges.

With the increasing cost of college education, you’ll likely need to borrow money to pay for school. In fact 51.8% of those who complete undergraduate programs use federal loans at some point. After maximizing scholarships and grants, many students turn to federal loans to help. But there may be limits on how much you can take out. Here’s what you need to know about federal student loan limits, and what your other options are.

How much can you borrow: Federal student loan limits

Federal student loan programs can be a great way to pay for higher education. They can have low interest rates and favorable repayment terms; you don’t have to meet minimum income requirements for monthly payments; and most federal loans don’t require a credit check. What’s more, federal loans come with flexible repayment options for those struggling to make ends meet after graduation.

To apply, you just need to complete the Free Application for Federal Student Aid or FAFSA. However, you may be limited in how much you can take out in federal student loans.

Although the cost of college has increased substantially in the past decade, Congress hasn’t passed any recent laws raising federal loan limits. The government last updated the loan limits during the 2008-2009 academic year, and the rates haven’t changed since.
The government doesn’t raise federal student loan limits on a regular or ongoing basis, and they aren’t automatically increased due to inflation. However, if inflationary conditions persist, congress may choose to revisit current limits on the amount college students can borrow.

Read more: What is the Most I Can Borrow for Student Loans?

The total amount you can borrow using federal student loans depends on the loan type and your student status (undergraduate or graduate).

There are three main types of federal student loans:

1. Direct subsidized loans

If you’re an undergraduate student with a financial need, you could qualify for Direct subsidized loans, which have advantages over other federal loans.

The US Department of Education will pay the interest on your loan while you’re in school, during the first six months after graduation — your grace period — and during any period of deferment, if applicable. Since the government covers your interest during these periods, you’ll save money by using a subsidized loan over other types of debt.

Your school determines what loans you’re eligible for and how much you can borrow, but you’re also subject to annual caps.

2. Direct unsubsidized loans

Unlike subsidized loans, both undergrads and graduate students can qualify for Direct unsubsidized loans, regardless of financial need. However, student loan borrowers are responsible for paying all of the interest that accrues on the loan, even while they’re in school.

How much you can borrow per year is dependent on your student status.

Source

3. Direct PLUS loans

While Direct subsidized loans and unsubsidized loans have limits, PLUS loans typically do not have borrower limits.

The federal government offers two main types of PLUS Loans: Parent PLUS Loans for parents who want to pay for their dependent undergraduate student’s education, and Grad PLUS Loans for graduate or professional students.

With both types of PLUS Loans, you can borrow up to the total cost of attendance — as determined by your selected college — minus any other financial aid you receive.

Despite their lack of borrower limits, PLUS Loans have three major drawbacks to keep in mind:

• Credit check required: Unlike other federal loans, PLUS Loans require borrowers to undergo a credit check. If you have a poor credit history, which may include high outstanding balances on credit cards, for example, you may need a cosigner — a relative or friend with a good credit score to apply for the loan with you — or you won’t qualify for a loan.

• Interest rate: PLUS Loans have the highest interest rate of all federal student loans. By contrast, the rate on Direct subsidized and unsubsidized loans for undergraduate students is usually lower. To check the latest PLUS and Direct Subsidized and Unsubsidized rates, visit the studentaid.gov rates page.

• Disbursement fee: PLUS Loans also have a high disbursement fee.

How much can you borrow: Private student loan limits

If you’ve exhausted all of your federal student aid options or don’t want to use PLUS Loans, an alternative to consider is private student loans¹. Private loans can be a valuable financing option to supplement your federal loans, helping you finish your degree.

Unlike most federal loans, with private lenders, like Earnest1, you can borrow up to 100% of the school’s certified cost of attendance, including money to cover the cost of textbooks, housing, and even transportation. And, there aren’t aggregate loan limits. You can take out additional loans if you need more time to finish college, or if you decide to pursue a master’s or professional degree.

How do I figure out how much money I’ll need for college?

The amount of money you’ll need to pay for college depends on a variety of factors, including:

• The type of school you choose and its location (public or private, in-state or out-of-state)

• If you’ll have access to scholarships, grants, or financial aid

• If you plan to get a job or participate in a work-study program while you’re in school

• Whether or not you’ll commute or live on campus.

It’s also important to consider additional costs, such as books and supplies, meals, transportation, and lifestyle expenses (including entertainment, furniture, and clothing).

If you’re planning to borrow money for college, you’ll also need to determine how much you can get in student loans. While taking out student loans may help offset your out-of-pocket costs, making your education more affordable up front, you’ll need to pay them back, with interest, once you’re no longer enrolled as a full-time student. A general rule of thumb is to take on no more in student debt than your anticipated future earnings potential.

Here are some questions to ask when weighing your student loan options:

• Will you opt for federal or private student loans, or a combination of both?

• What year are you in school?

• Are the loans you’re considering subsidized or unsubsidized?

• Do the loans you’re considering have fixed or variable interest rates?

• What are the interest rates and repayment terms?

• Does the student loan servicer require you to undergo a credit check? How healthy is your credit history? Will you need a cosigner to qualify?

• Do you plan on refinancing your student loans at some point?

Keep in mind, you’ll need to think about the amount of money you’ll need annually to cover college costs. Another key factor: Tuition typically goes up every year, so be sure to factor anticipated increases into your overall budget.

For high school students entering college in 2024, the rising cost of tuition means that freshmen are projected to amass $37,000 in student debt in undergrad, surpassing the federal student loan limit of $31,000. To bridge the gap, private student loans and parent PLUS loans are two additional loan options.

Which should I choose, private or federal student loans?

Ultimately, the decision is yours, although it depends on your eligibility and how much you can borrow. Federal student loans typically offer benefits that private loans don’t, such as lower interest rates, borrower perks, and no credit checks. This makes federal loans a good choice for most people. Generally speaking, it’s a good idea to exhaust your federal student loan options first, then supplement any additional education expenses with private loans if you need to2.

Here are some of the advantages of federal and private student loans to help you decide which option may be best for you.

The 4 Advantages of federal student loans

As their name implies, federal student loans are offered by the government. For that reason, they come with a variety of benefits, such as:

1. Consistent interest rates

Federal student loan interest rates are fixed, meaning they remain the same until the end of your loan term. The interest rates aren’t impacted by fluctuating market rates, so your monthly student loan payments won’t change. You’ll also know the total amount of your loan balance is at all times.

2. Possible subsidies

Some federal student loans are subsidized—the government pays the interest while you’re in school, enrolled part-time or half-time, or in deferment. Federal subsidies have the potential to save you thousands in interest payments before you even graduate. On the other hand, unsubsidized loans begin accruing interest as soon as you borrow the money (even while you’re in school). If your loan is in forbearance, interest will also continue to accrue, so it’s important to understand what type of loan you have and when the interest payments will kick in.

3. Accommodating repayment plans

The government offers several repayment plan options for federal student loans, including income-driven repayment plans for individuals who can’t afford high monthly payments.

4. Federal student loan forgiveness

In some cases, you may qualify for one of the many federal student loan forgiveness programs offered by the government. One such program is Public Service Loan Forgiveness (PSLF), which may forgive student loan debt for individuals who’ve worked as teachers, firefighters, nurses, and in other community support roles in the public sector.

The 4 Advantages of private student loans

Typically offered by banks, credit unions, state loan programs, and non-federal institutions (which could include the college or university you attend), private student loans provide the following advantages:

1. Competitive interest rates

If you have good credit, or a co-signer with a solid credit history, you may qualify for a private student loan with a lower interest rate than you could get with a federal student loan. Over the life of your loan, the lower rate could allow you to save a significant amount of money.

2. Variable and fixed interest rates

Federal loans only have fixed interest rates, meaning they never change. Private student loans may have fixed or variable rates, which can fluctuate over time. Variable-rate loans tend to have lower interest rates at first, which can be advantageous if you plan to pay off your loan aggressively.

3. Higher borrowing limits

Private student loans aren’t need-based; federal student loans are. That means you may be able to qualify to borrow more money from a private lender, especially if you apply with a cosigner with a strong credit history. That’s why people often use private student loans to bridge financial gaps in their ability to afford the cost of higher education

4. Flexible repayment options

Private student loans typically offer multiple repayment options that could be beneficial to students both while in school and after graduation. For example, Earnest offers deferring payments until nine months3 after you graduate, making small fixed payments while in school, interest-only payments while in school, or making full payments as a student to save money on your loan. You also have the option to refinance4 to lower your monthly payment or interest rate.

Private student loans with Earnest

If you need to take out student loans to pay for your education, the key is making sure you borrow the right amount — not too much, or too little and choose the right lending partner. You may be able to borrow more than you need, but remember — you’re going to need to pay it all back with interest. On the other hand, you want to make sure you borrow enough, taking into account all of the expenses we covered above.

With many private student loan lenders to choose from, what makes Earnest different? We have over 10 years in the loan business, and have earned the distinction of being one of the most highly rated and awarded private student loan companies. Our customers give us 4.7/5 stars on Trustpilot.

If you’re planning to apply for private student loans, it’s important to check starting interest rates of every lender. To view Earnest’s interest rates, visit our private student loans page. You can also check your eligibility for a loan in just 2 minutes, and doing so won’t hurt your credit.

This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

¹ Before applying for private student loans, it’s best to maximize your other sources of financial aid first. It’s recommended to use a 3-step approach to assembling the funds you need: 1) Look for funds you don’t have to pay back, like scholarships, grant, and work-study opportunities. 2) Next, fill out a FAFSA(R) form to apply for federal student loans. Federal Direct subsidized and unsubsidized loans, excluding PLUS Loan for Parents and PLUS Loan for Graduate and Professional Students which require a credit check and a credit worthy endorser if the parent or graduate or professional student has adverse credit, do not require a credit check or cosigner, and offer various protections if your struggling with your payments. 3) Finally, consider a private student loan to cover any difference between your total cost of attendance and the amount not covered in steps 1 and 2. For more information, visit the Department of Education website at https://studentaid.ed.gov.

² Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

³ You may lose benefits associated with your underlying federal and/or private loans if you refinance such as federal Income-driven Repayment Plans, Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options. If you file for bankruptcy, you may still be required to pay back this loan.

⁴ Choosing to refinance to a longer term may lower your monthly payment, but increase the amount of interest you may pay. Choosing to refinance to a shorter term may increase your monthly payment, but lower the amount of interest you may pay. Review your loan documentation for the total cost of your refinanced loan.