How Much Can You Borrow in Student Loans Per Year?

Student loans are a common financial tool many individuals use to fund their higher education pursuits. These loans help cover a wide range of educational expenses, including tuition, fees, and living costs. Borrowing is subject to annual limits, which manage debt accumulation and promote responsible lending. These limits vary significantly based on the type of loan, the student’s academic standing, and their dependency status.

Federal Student Loan Annual Borrowing Limits

Federal student loans, provided by the U.S. Department of Education, come with specific annual limits designed to regulate the amount students can borrow each academic year. These limits apply primarily to Direct Subsidized Loans and Direct Unsubsidized Loans.

Direct Subsidized Loans are for undergraduate students with financial need, with the government paying interest during enrollment, grace periods, and deferment. Direct Unsubsidized Loans are available to both undergraduate and graduate students regardless of financial need, but interest accrues from disbursement.

For dependent undergraduate students, the annual borrowing limits are structured by academic year. A first-year dependent undergraduate student can borrow up to $5,500, with no more than $3,500 of that amount being in subsidized loans. In their second year, the total annual limit increases to $6,500, with a maximum of $4,500 in subsidized loans. For third-year and subsequent undergraduate studies, dependent students can borrow up to $7,500 annually, with a cap of $5,500 in subsidized loans.

Independent undergraduate students, and dependent students whose parents are unable to obtain a Direct PLUS Loan, have higher annual borrowing limits due to increased unsubsidized loan eligibility. A first-year independent undergraduate student can borrow up to $9,500, with a maximum of $3,500 in subsidized loans. The annual limit for a second-year independent undergraduate is $10,500, with up to $4,500 in subsidized loans. For third-year and beyond, independent undergraduate students can borrow up to $12,500 annually, including up to $5,500 in subsidized loans.

Graduate and professional students are not eligible for Direct Subsidized Loans. These students can borrow up to $20,500 annually in Direct Unsubsidized Loans, with some health professions programs qualifying for higher limits up to $40,500 per year.

Factors That Limit Annual Student Loan Borrowing

Beyond the fixed annual limits set for federal student loans, several other factors can influence the actual amount a student can borrow each year. The ultimate cap for all financial aid, including student loans, is the Cost of Attendance (COA) as determined by the student’s educational institution.

The COA is a comprehensive estimate including tuition, fees, room and board, books, supplies, transportation, and personal expenses. Total financial aid from all sources, including loans, cannot exceed this school-certified COA.

Federal student loans also have aggregate, or lifetime, limits that cap the total amount a student can borrow over their entire academic career. This aggregate limit can impact annual borrowing if a student is approaching or has reached their maximum.

Aggregate Loan Limits

For dependent undergraduate students, the aggregate limit is $31,000, with no more than $23,000 from subsidized loans.
Independent undergraduate students and dependent students whose parents are unable to obtain PLUS Loans have an aggregate limit of $57,500, with a maximum of $23,000 in subsidized loans.
For graduate and professional students, the combined aggregate limit for Direct Subsidized and Unsubsidized Loans is $138,500, which includes any federal loans received for undergraduate study.
For certain health professions students, this aggregate limit can be as high as $224,000.

Another factor that can indirectly affect annual borrowing is Satisfactory Academic Progress (SAP). Educational institutions establish SAP policies, which generally require students to maintain a minimum grade point average and complete a certain percentage of attempted credits within a defined timeframe. Failure to meet these academic standards can result in the loss of eligibility for federal student aid, including loans.

Private Student Loan Annual Borrowing Considerations

Private student loans, offered by banks and other financial institutions, have annual borrowing limits that differ from federal loans and are not uniform or fixed. Instead, the maximum amount a student can borrow annually with a private loan is generally based on the school’s certified Cost of Attendance (COA) minus any other financial aid the student has received, such as federal loans, grants, and scholarships.

The school certifies the COA to the private lender, establishing the maximum eligible loan amount. Lenders typically allow borrowing up to 100% of these certified costs, after other aid is considered, ensuring alignment with actual expenses.

A primary factor in determining the approved loan amount for private student loans is the creditworthiness of the borrower, and often a co-signer. Lenders assess credit scores, income, and debt-to-income ratios to evaluate the applicant’s ability to repay the loan. A strong credit profile can lead to approval for higher loan amounts and more favorable interest rates.

Private lenders may also consider factors like the student’s major or future income, though credit assessment is primary. While private loans can cover costs up to the COA, it is advised to exhaust federal loan options first due to their more favorable terms and repayment protections. Some private lenders may have their own internal lifetime limits.