Not everyone has the financial resources to pay for college out of pocket because it can be pricey. For this reason, the government offers a range of financial aid to assist students in pursuing their education.
Federal student loan borrowing limits depend on a few factors. (Source: Getty Image)
Types of Federal Student Loans
Federal student loans are money borrowed from the federal government directly to cover educational expenses like tuition, room and board, meal plans, and textbooks. These loans must be repaid with interest, which normally begins six months after you graduate or lose your status as a half-time student. It’s crucial to comprehend how much you can borrow from federal student loans to determine how they fit into your strategy for paying for college. This might assist you in creating a budget for spending and figuring out whether you need to use other methods to pay for your education.
Borrowing caps for federal student loans are based on a few variables. Federal student loans come in two types: direct subsidized loans and direct unsubsidized loans, which should be noted.
Students who can prove their financial necessity can apply for direct subsidized loans. Federal Perkins loans are among them; they are accessible to students with severe financial requirements. Direct subsidized loans save you money by having the government pay the interest while you are still in school.
The cost of attendance less any additional financial aid you are eligible for is used to calculate your direct unsubsidized loan amount. They are not based on your financial need. Parent PLUS loans are unsubsidized loans that let parents take out money to cover the full cost of attendance less any additional financial help their child may be eligible for. Interest builds up on Direct unsubsidized loans while you’re in school.
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Federal Student Loan Eligibility May Also Vary on Dependency Status
Your year of study, your dependency status, and the amount borrowed through subsidized and unsubsidized loans all have a role in how much you can borrow through federal student loans.
Dependent students may borrow (apart from those whose parents are not eligible for PLUS loans):
- $5,500 per year for first-year students (with a maximum of $3,500 in subsidized loans).
- Undergraduate second year: $6,500 yearly (with a maximum of $4,500 in subsidized loans)
- Undergraduate students in their third and subsequent years: $7,500 yearly (with a maximum of $5,500 in subsidized loans).
- Student in a graduate or professional program: N/A (these pupils are regarded as autonomous)
- $31,000 is the maximum loan amount (with a maximum of $23,000 in subsidized loans)
Undergraduates who are independent or dependent and whose parents are not eligible for PLUS loans may borrow:
- $9,500 per year for first-year students (with a maximum of $3,500 in subsidized loans).
- $10,500 per year for second-year undergraduates (with a maximum of $4,500 in subsidized loans)
- Undergraduate students in their third and subsequent years: $12,500 annually (with a maximum of $5,500 in subsidized loans).
- $20,500 (unsubsidized only) for graduate or professional students
- Undergraduates’ total debt cap is $57,500, with a maximum of $23,000 in subsidized loans.
- NOTE: This sum includes all federal undergraduate loans received. TOTAL loan maximum (graduate or professional student): $138,500 (with no more than $65,500 in subsidized loans).
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