How Much Money Can I Borrow For My Student Loan?
In addition to Perkins Student Loans, the US Department of Education also administers the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Student Loan) Program. Both the FFEL and Direct Student Loan programs contain what is generally known as a Stafford Student Loan and PLUS (parent) Loans.
Schools will generally participate in either the FFEL or Direct Student Loan program but also participate in both. Under the Direct Student Loan Program, the funds for your student loan will come directly from the federal government. Funds for the FFEL will come directly from a bank, credit union, or other financial institution that participates in the program. Eligibility rules and student loan amounts are the same under both programs, but repayment plans will differ.
For either type of student loan, you must fill out a free FAFSA application. After your FAFSA is processed, your chosen school will review the results and inform you about your student loan eligibility. You will also have to sign a promissory note. This is a binding legal document that lists the terms under which you are borrowing and the conditions under which you agree to repay your student loan.
The amount allotted to borrow depends on your year in school and whether you have a subsidized or unsubsidized Direct or FFEL Stafford Student Loan. A subsidized student loan is awarded based on your financial need. If you are eligible for a subsidized student loan, the government will pay the interest on your student loan while you are in school, and for the first six months after you leave school. In addition, if you qualify to have your payments deferred. Depending on financial need, you may be able to borrow subsidized money for an amount up to the annual loan-borrowing limit for your level of study.
You might be able to borrow student loan funds beyond your subsidized loan amount even if you have not demonstrated financial need. In this case, you would receive an unsubsidized student loan. Your chosen school will subtract the total amount of your other financial aid from your cost of attendance to determine your eligibility for an unsubsidized student loan. Unlike a subsidized student loan, you are responsible for the interest from the time the loan is disbursed until it has been paid in full. You can choose to pay the interest or allow it to accrue and be capitalized. It is important to remember that capitalizing the interest will increase the amount you have to repay.
You can receive a subsidized student loan and an unsubsidized student loan for the same enrollment period as long as you do not exceed the annual student loan limits.
If you are a dependent undergraduate student, each year you may borrow up to:
• $3,500 if you are a first year student enrolled in a program of study that is at least a full academic year.
• $4,500 if you have completed your first year of study and the remainder of your program is at least a full academic year.
• $5,500 if you have completed two years of study and the remainder of your program is a full academic year.
If you are an independent undergraduate student or even a dependent student whose parents have applied but did not qualify for a PLUS Loan, each year you can borrow up to:
• $7,500 if you are a first year student enrolled in a program of study that is a full academic year. No more than $3,500 of this amount may be in subsidized student loans.
• $8,500 if you have completed your first year of study and the remainder of your program is a full academic year. No more than $4,500 of this amount may be in subsidized student loans.
• $10,500 if you have completed two years of study and the remainder of your program is a full academic year. No more than $5,500 of this amount may be in subsidized student loans.
When you have graduated with a graduate or professional degree, the maximum total student loan debt allowed from a Stafford Student Loans is $138,500. No more than $65,500 of this amount may be in subsidized student loans. This maximum total graduate debt limit includes Stafford Student Loans received for undergraduate study.
The above amounts are the maximum yearly amounts you can borrow in both subsidized and unsubsidized FFELs or Direct Student Loans, individually or in combination. Because you are not allowed to borrow more than your cost of attendance minus the amount of any Federal Pell Grant you are eligible for and also minus any other financial aid you have obtained, you might receive less than the annual maximum amounts.
