How Much to Borrow

Determine How Much to Borrow

Whether you're heading off to college for the very first time or returning for another academic year, you will need to figure out how much money you can get in student loans once you have exhausted other financial aid options.

To begin answering that question, first look at the types of student loans available.

Federal Student Loans

The first type of loan you should consider is federal student loans. You must complete the Free Application for Federal Student Aid (FAFSA®) to determine eligibility. If you are eligible, federal loans will be included in the award letters from the schools you've been accepted to.

Direct Subsidized Loans

Direct Subsidized Loans are available to undergraduate students who demonstrate financial need. The benefit of a Direct Subsidized Loan is that the U.S. Department of Education pays the interest on your loan while you are in school at least half-time, for the first six months after you leave school and during any period of deferment.

You can borrow up to $3,500 during your first year of undergraduate studies, up to $4,500 during your second year and up to $5,500 during your third year and beyond.

Direct Unsubsidized Loans

Direct Unsubsidized Loans are available to undergraduate, graduate and professional students. Unlike subsidized loans, you are responsible for paying the interest while you are in school, your grace period and during any deferment periods. Borrowers do not need to demonstrate financial need to be eligible.

Students who are dependents of their parents can borrow up to $5,500 during their first year of undergraduate studies, up to $6,500 during their second year and up to $7,500 during their third year and beyond. Independent students can borrow up to $9,500 during their first year, $10,500 during their second year and up to $12,500 in their third year and beyond.

Dependent students can borrow a total of $31,000 in subsidized and unsubsidized loans over the span of their college career, and independent students can borrow up to $57,500. The max amount any student can borrow in subsidized loans is $23,000.

Direct PLUS Loans

Direct PLUS Loans for Parents are available to parents with dependent students in an undergraduate program. Direct PLUS Loans for Graduate and Professional Degree Students are available to students in a graduate or professional program. Borrowers must pass a credit check and can borrow up to the full cost of attendance less any other financial aid. There may be an additional step to apply for PLUS Loans for Parents, so check with your school for their preferred process.

Private Student Loans

Depending on how much you receive in financial aid, you may also need private student loans to cover your expenses. The amount you can borrow depends on several factors, including your cost of attendance minus other aid, the lender's annual borrowing limits, your credit history and whether or not you have a creditworthy cosigner.

Use this five-step process to help you determine how much to borrow.

Step 1: Identify Your Annual College Costs

Check your school's website for the annual cost of attendance. Typically, these costs include tuition and fees, housing and living expenses, books and supplies. You can also use their net price calculator to estimate your cost to attend.

Step 2: Assess Your Free Money, Family Contributions and Savings

Take a look at any free money you have for college. Free money includes grants, scholarships, family contributions, savings and wages, which can significantly reduce your overall cost of attending school.

Step 3: Calculate Your Funding Gap

Once you determine how much free money you have to contribute toward college costs, you can estimate how much you may need to cover.

Step 4: Apply for the Work-Study Program or Other Employment

The Federal Work-Study Program is a part-time employment program funded by the government that allows students with financial need to earn money that can be used to help pay for college. You indicate your interest when you complete the FAFSA and may receive it as part of your award letter, if eligible. Money earned from other part- or full-time employment can also be used toward college expenses.

Step 5: Apply for Student Loans

Once you receive your award letter, you will know how much in federal student loans is available to you. You can then use this student loan calculator to estimate how much you may need to also borrow in private student loans.

When it comes to borrowing, we recommend you exhaust free money like savings, grants and scholarships first. If you still need to borrow, compare federal and private student loans and choose the loans that best fit your needs.


FAFSA is a registered service mark of the U.S. Department of Education.