How much can I take out in student loans?

You may be able to borrow up to the full cost of your college education in student loans, although the exact amount depends on the type of loan you get. Dependent and independent undergraduate students can borrow up to a total of $31,000 and $57,500 in federal student loans, respectively, and many private loans set lifetime limits.

Regardless of the maximum loan amount, you should only borrow what you truly need. The more you borrow, the more interest will accrue. To get a rough estimate of how much you’ll need to borrow, tally up tuition and fees, housing, books, supplies and dining expenses, then subtract any other aid you’ve received.

Federal student loan limits

Using standard federal student loan limits, the cost of attendance and your Free Application for Federal Student Aid (FAFSA) information, your school determines how much you’re eligible to borrow in federal student loans. The amount you can take out is based on:

• The cost of attending the school.
• Your year in school.
• Your status as a dependent or independent student (whether your parents financially support you).

There are three types of federal student loans:

1. Direct Subsidized Loans: Available to undergraduate students with financial need. The Department of Education pays interest costs while the borrower attends school and during the grace deferment periods.
2. Direct Unsubsidized Loans: Available to undergraduate and graduate students, regardless of financial need. The borrower pays all interest costs.
3. Direct PLUS Loans: Available to parents and graduate students, regardless of financial need.

Each type has its own loan limits.

Undergraduate federal loan limits

If your parents financially support you, then you’re considered a dependent student. Federal student loan limits for dependents are $5,500 to $7,500 each year, up to a lifetime limit of $31,000.

You may be considered independent if you are over the age of 24, a military veteran, married or financially support yourself. Independent students can borrow $9,500 to $12,500 annually and up to $57,500 total. If you’re a dependent undergrad but your parents don’t qualify for a parent PLUS loan, you may be able to borrow up to the federal student loan limits for independent students.

Graduate federal loan limits

Students working on a graduate or professional degree can borrow up to $20,500 per year in Direct Unsubsidized Loans, with a lifetime maximum of $138,500 up to $65,000 in subsidized loans (including any federal loans borrowed during undergraduate school). If a borrower hits the graduate loan limit and needs to borrow more, they can take out a federal grad PLUS loan, up to the total cost of attendance.

Private student loan limits

Private student loans are originated by private institutions such as banks, credit unions and online lenders. Private student loans are usually best when you’ve maxed out your federal financial aid potential because they require hard credit checks for approval and lack benefits like loan forgiveness opportunities and income-driven repayment plans.

While many lenders will allow you to borrow up to the total cost of attendance, the total amount you can borrow will vary based on the lender, your major, your year in school, your credit score and whether or not you have a co-signer.

Below are examples of student loan limits among some private lenders.

How much should you borrow in student loans?

Although student loan limits define how much you can borrow, you aren’t required to borrow the maximum if you don’t need it. Depending on the loan terms, it could take years to pay off the debt. The longer it takes, the more interest accrues — so it’s usually best to borrow just as much as you need.

As a rule of thumb, try to keep your monthly student loan payment around 10 percent of your projected after-tax income your first year out of school. For example, if your take-home pay is $2,800 a month, then your student loan payments shouldn’t exceed $280.

The Bureau of Labor Statistics may help you estimate your postgraduation salary, and you can use a student loan calculator to estimate your loan payment based on the loan amount and interest rate.

Can you increase your student loan amount?

Private lenders likely won’t let you exceed their borrowing limits — and you also can’t borrow more than the federal student loan limits, even if you’re attending an expensive school. If you or your parents are willing to take out a PLUS loan, you might be able to fill the gaps that way.

However, Parent PLUS loans have the highest interest rates out of all of the federal loan products and could lead to more high-interest debt down the road.

Is there a benefit to borrowing less than the cost of tuition?

Not everyone feels comfortable borrowing the full cost of tuition. Yes, federal student loans cover up to $7,500 annually for dependent students and $12,500 annual for independent students, but this is a lot of money that you’ll have to repay once you graduate.

If you prefer, you can borrow less than the cost of tuition. This can help you save on interest and walk away with less student loan debt. However, whatever balance isn’t covered will still be your responsibility, but there are more affordable forms of financial aid available.

What to do if you hit your federal loan limit

If you’ve reached your limit on student loans, there are still ways to reduce the costs to make a college education financially easier:

• Attend an in-state school: If you’re looking into an out-of-state school, consider going to a cheaper in-state one.
• Explore online programs: Enrolling in an online program could help you save money on housing and gas.
• Federal work-study programs: Applying for a work-study job can help you reduce the funding gap and rely less on additional loans.
• Live off-campus or with roommates: Instead of living in the dorms on campus, consider living with a roommate off-campus to save money on living expenses.
• Rent or buy used textbooks: Purchasing used textbooks instead of brand-new ones can help you save money.
• Scholarships and grants: Unlike student loans, you don’t have to repay grants or scholarships.
• Work a part-time job: If you have free time, consider picking up a part-time job to help cover some school expenses.

Bottom line

Students turn to private and federal student loans to cover a portion or the entirety of their educational costs. Although loan amounts are capped based on the type of lender, it’s still possible to accrue thousands of dollars in student loan debt that you’ll be responsible for once you graduate. If you want a more affordable option that won’t burden you financially in the future, consider alternative forms of financial aid, such as grants and scholarships.