If you’ve exhausted other sources of funding like family help, grants, work study, and scholarships and still have a gap between what college costs and what you can afford, it may be time to turn to student loans. If so, you’re not alone—more than 60 percent of college students graduate with some form of student loan debt, reports The Institute for College Access & Success. But how much can you borrow? Limits vary depending on the kind of loan you’re interested in, as well as your year in school.

Federal Student Loans

These loans are originated by the federal government. To qualify, complete the Free Application for Federal Student Aid (FAFSA®), which schools use to determine eligibility. If you are eligible, federal loans will be included in the award letters you receive from the schools you've been accepted to. There are a few types of federal student loans, with different limits on borrowing amounts:

Direct Subsidized Loans

  • What they are: These loans are available to undergraduate students who demonstrate financial need. The US 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 a period of deferment.
  • How much you can borrow: Your school determines the actual loan amount you’re offered each year, but there are also limits set by the government. Learn more here.

Direct Unsubsidized Loans

  • What they are: These loans, which are available to undergraduate, graduate and professional students, are similar to subsidized loans. However, you are responsible for paying the interest while you are in school, during your grace period, and during a period of deferment. You don’t need to demonstrate financial need to be eligible.
  • How much you can borrow: Your school determines the actual loan amount you’re offered, but your dependency status will also inform how much you can borrow each year. Learn more here.

Direct PLUS Loans

  • What they are: 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. A credit check is required, and people with poor credit history may not qualify.
  • How much you can borrow: The limit on PLUS loans is the full cost of attendance minus any other financial aid.

Private Student Loans

  • What they are: Unlike federal loans, which come from the government, private student loans are made by private organizations like banks and credit unions. You may want to consider them if you’re not eligible for federal aid, or if the loans offered to you don’t quite cover your needs.
  • How much you can borrow: The amount you can borrow varies from lender to lender, and 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. In most cases, private student loans may have higher borrowing limits than federal ones.

How much should I take out?

This five-step process can 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, this number will 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: Take stock of your available funding.

Add up how much money you already have for college, from things like grants, scholarships, family contributions, savings, and earnings from working.

Step 3: Calculate your funding gap.

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

Step 4: Get a job.

The Federal Work-Study Program is a part-time employment program funded by the government. It allows students with financial need to earn money 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 you’re eligible, apply for positions. If not, seek out other employment to help offset your 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 still need to cover.

We recommend you exhaust savings, grants, and scholarships before taking out loans. If you do need to borrow, compare federal and private student loans and choose the loans that best fit your needs.

FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover® Student Loans.

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