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What is the Maximum Amount of Loans I Can Take On?

Broc Sleek

In College Planning & Financial Aid Managing MoneyBroc Sleek

How can I pay for school? The maximum amount of loans to qualify for depends on your unique financial situation. As you start to apply for student loans, keep in mind that you should only borrow the money you actually need. Don’t get into debt over your head.

Are you wondering about the maximum amount you could borrow? Curious about how you can use student loans? Before you start planning, take a look at this overview.

Federal Student Loan Limit

Federal student loans are loans made to college students by the government, and they can be subsidized or unsubsidized.

What is the difference between the two loans? Subsidized loans are based on your income, while unsubsidized loans are not dependent on your financial situation.

To apply for these loans, you need to fill out a Free Application for Federal Student Aid (FAFSA). Eligibility varies depending on your income, dependency status, year in school, and the type of federal loan. You can also learn about various grants you might receive. Grants are an important factor in determining how much to borrow.

There are limits on the maximum amount of loans you can borrow. As of 2020, you can borrow up to $12,500 annually and $57,500 total, if you are an undergrad. For graduates, you can borrow up to $20,500 annually and $138,500. PLUS loans are offered by the government to graduate students and parents to fill the additional cost of attendance.

*Note that the undergraduate limit only applies to independent undergraduates. 

Private Student Loan Limits

In contrast to federal loans obtained from the government, private student loans are loans obtained through banks, credit unions, or other private businesses. The limits vary from lender to lender. Individual lenders may have specific dollar limits you may borrow each academic period or even a lifetime limit. Still, in most cases, you cannot borrow more than the cost of your education. Unlike federal loans, private loans are credit-based and a cosigner may be required.

Because different organizations make private student loans, not only may the maximum loan amount differ, but the loan terms, interest rates, additional benefits, and even customer service can vary from lender to lender. Before applying for private loans, check into the lender’s options and limits to ensure they can meet your needs.

What can a loan cover?

What exactly is the school-certified cost of attendance? Well, this phrase doesn’t just refer to the cost of tuition. Typically, this includes the following:

  • Tuition
  • Books
  • Cost of living
  • Meal plans
  • Transportation

In some cases, the costs may include more than the items noted on this list. For more information about what your school includes in their cost of attendance, please check with your school’s financial aid office web page.

Imagine that the school-certified cost of attendance is $50,000 per year, but you are going to receive $10,000 in financial aid. In this situation, you can only borrow up to $40,000, but again, the exact numbers vary based on your situation and the lender.

Where can I utilize student loans?

You cannot exceed the school-certified cost of attendance when taking out student loans. When you take out student loans, there are restrictions on how the funds will be applied.

As a general rule of thumb, you can use these loans to cover all education-related expenses, and that even includes paying for dependent care if you have a child while you’re in school. Student loans are disbursed directly to the school as opposed directly to the borrower, like personal loans.

However, to ensure you’re making the most of your loans, you should not use the money to fund non-essentials such as decorating your dorm room, going out to eat, or taking a vacation over spring break.

How much should I borrow?

To assess how much you need, look at the school-certified cost of attendance, and find out exactly what’s included in that number. Then, make a list of your other expenses. Beyond the room, board, tuition, and books, you need to consider costs such as flying home for Christmas break, renting an apartment in the summer, a laptop, going on a study abroad program, or any other expenses you’re likely to incur while in college.

Then, consider which of these expenses are genuinely essentials and which you can do without. Before borrowing too much money, consider the value of your degree. In many cases, borrowing money to get the education you need to launch your career is a lucrative move in a financial sense. However, you don’t want to borrow tens of thousands of dollars and finish college with a degree that doesn’t lead to a career.



Please note that the information provided on this website is provided on a general basis and may not apply to your own specific individual needs, goals, financial position, experience, etc. LendKey does not guarantee that the information provided on any third-party website that LendKey offers a hyperlink to is up-to-date and accurate at the time you access it, and LendKey does not guarantee that information provided on such external websites (and this website) is best-suited for your particular circumstances. Therefore, you may want to consult with an expert (financial adviser, school financial aid office, etc.) before making financial decisions that may be discussed on this website.