Understanding Federal Student Loan Limits

Student loans backed by the Federal government are capped at amounts expected to pay for college costs, not for new sports cars or airline tickets to the beaches of Thailand. At the beginning of 2015, students in the United States owed $1.2 trillion dollars on their loans, according to the National Journal. More problematic was the reported 7 million Americans defaulting on their loans.

To curb excessive borrowing, The U.S. Department of Education has established ceilings on all Direct Subsidized Loans and Direct Unsubsidized Loans it gurarantees. Federal Stafford Loans are regulated according to two limit categories:

  • Annual Loan Limits. The maximum in terms of dollars a student may borrow for one academic year (9 months or 12).
  • Cumulative/Aggregate Loan Limits. The maximum a student may borrow during their participation in loan programs during their total degree program. For graduate students, the aggregate total includes outstanding balances on Federal undergraduate loans.

How Much Money Can Students Borrow?

Federal regulations help ensure that students only borrow up to the total cost of their attendance at their degree program. If other financial aid is made part of the student's overall support package, the loan amount will be reduced by the amount of other aid. Limits are established by college year and whether the student has independent status. Dependent students receive lower caps since their parents can apply for Direct Plus loans to offset tuition shortfalls.

The U.S. Department of Education has established the following student loan limits on Stafford Loans:

Annual Limits

First-Year Undergraduate (No more than $3,500 may be in subsidized loans):
Dependent: $5,500
Independent: $9,500

Second-Year Undergraduate (No more than $4,500 may be in subsidized loans):
Dependent: $6,500
Independent: $10,500

Third-Year and Beyond Undergraduate (No more than $5,500 may be in subsidized loans):
Dependent: $7,500
Independent: $12,500

Graduate or Professional Students Annual Loan Limit (No more than $23,000 may be in subsidized loans):
Dependent: None (The Federal government considers all graduate students independent)
Independent: $57,500—No more than $23,000 of this amount may be in subsidized loans.

Cumulative/Aggregate Limits

Undergraduate Subsidized and Unsubsidized Aggregate Loan Limit (No more than $23,000 may be in subsidized loans):
Dependent: $31,000
Independent: $57,500

Graduate Subsidized and Unsubsidized Aggregate Loan Limits (No more than $65,000 may be in subsidized loans):
Independent: $138,500

Students Loan Limits Higher for Students Pursuing Health Care Degrees

Students attending medical schools will find higher Federal student loan limits to offset the costs of doctoral programs in fields such as Optometry, Dentistry, Veterinary Medicine, and other approved disciplines.

Students must be enrolled in colleges and universities in the United States to qualify. For a 9-month school year, participating students can borrow up to $40,500 each year, or $47,167 based on a 12-month program.

Caps are also higher in graduate healthcare disciplines of pharmacy, public health, chiropractice, and clinical psychology with Federal student loan limits of $33,000 (nine-month programs) or $37,167 (12-month programs).

Student borrowers should note that repayment on their loans begins with separation from college, whether they graduate or not. The first day after a missed payment, the loan becomes delinquent, with delinquencies of more than 90 days reported to the three major credit bureaus.

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