Summary: All student loans are subject to borrowing limits. Annual limits specify how much you can borrow in a single school year, aggregate (cumulative) limits specify how much you can borrow through that loan program, and cost of attendance limits specify that the loan amount must be less than the school’s official cost of attendance minus other financial aid received.
Most student loans have several types of limits on the amount you can borrow.
- Annual Loan Limits: An annual limit specifies the maximum amount you can borrow in a single academic year.
- Aggregate Loan Limits: An aggregate limit, sometimes called a cumulative limit, specifies the total amount you are allowed to borrow during your academic career.
- Cost of Attendance Limits: A cost of attendance (COA) limit specifies that the loan amount must be less than the school’s official cost of attendance minus other financial aid received.
The cost of attendance limit may be applied in addition to (or instead of) the annual loan limit. This loan limit is intended to prevent the total of all financial aid, including the student loans, from exceeding the college’s total cost of attendance.
How Student Loan Limits are Calculated
When you take out a student loan, both the annual and aggregate loan limits are applied to the loan amount. Each type of loan limit represents a restriction on the amount you can borrow. All restrictions on your eligibility must be applied in combination.
Sometimes, you may want to borrow an amount that satisfies the annual limit, but you will qualify for a lower amount because your total debt would exceed the aggregate loan limit. You will then be restricted to the lower loan amount.
For example, the Direct Unsubsidized Loan has annual limits for dependent undergraduate students based on the student’s year in school. The 2015-2016 loan limits are:
- $5,500 for freshmen
- $6,500 for sophomores
- $7,500 per year for juniors, seniors, and any additional undergraduate years of study
The Direct Unsubsidized Loan also has an aggregate loan limit of $31,000 for dependent undergraduate students.
Suppose a dependent undergraduate student in a 5-year engineering degree program borrows the annual maximum for each of the first four years, for a total of $27,000. During the student’s fifth year the annual limit would be $7,500. However, as the next table shows, the remaining aggregate loan eligibility is only $4,000 after the end of the fourth year. So, the student can’t borrow the $7,500 annual maximum as a fifth-year senior. Instead, this student can borrow no more than $4,000.
Private Student Loan Limits
Private student loans usually have an annual limit equal to the cost of attendance minus other financial aid. Most private student loans have aggregate loan limits of $75,000 to $120,000 for undergraduate students and higher limits for graduate and professional students. These aggregate loan limits usually include all student loan debt, including both federal and private student loans.
Medical and dental residency and relocation loans and law bar study loans typically have annual loan limits that are 50% lower than the annual loan limits for students who are currently enrolled in school.
Federal Student Loan Limits
A federal student loan limit isn’t the amount you will be able to borrow, it’s the maximum the school can approve you to borrow. Your school might give you less than the loan limit.
The annual and aggregate borrowing limits on federal student loans vary based on several factors:
- Loan Program (Direct Subsidized Loan, Direct Unsubsidized Loan, Perkins Loan, or Direct PLUS Loan)
- Dependency Status (Dependent or Independent)
- Year in School or Grade Level (Freshman, Sophomore, Junior, Senior, or Graduate Student)
- Medical School
If your grade level changes in the middle of the academic year, you may qualify for higher annual loan limits. You would then be eligible to borrow the difference between the new annual loan limit and the amount you already borrowed during the same academic year.
Similar rules apply to transfer students. Transferring from one school to another does not reset the loan limits. Transfer students may borrow the difference between their annual loan limit at the new school and the amount received at the previous school.
Loan fees (which may be added to the loan balance) and capitalized interest do not count against the loan limits.
Direct Subsidized and Unsubsidized Loan Limits
Your school's financial aid office determines how much you will be able to borrow each year. This amount might be less than the annual loan limit.
Eligibility for Direct Subsidized Loans is based on demonstrated financial need, up to the annual and aggregate loan limits. (As of July 1, 2012, students attending graduate school or professional school are no longer eligible to borrow new Direct Subsidized Loans.)
Eligibility for Direct Unsubsidized Loans does not depend on demonstrated financial need.
Aggregate loan limits, sometimes referred to as cumulative limits, may be refreshed by repaying the debt. So, if you have hit the aggregate loan limit, you will need to pay down your loan before you will be eligible to borrow more.
The aggregate loan limits for students attending graduate school or professional school students include any undergraduate federal student loan debt.
Borrowing Limits for Direct Subsidized and Unsubsidized Loans
Higher Direct Unsubsidized Loan Limits for Health Profession Students
Health profession students, such as students enrolled in medical school, are eligible for higher Direct Loan limits.
There are two different levels of increased loan limits, depending on the area of study (see table). These limits are available only to health profession students enrolled at U.S. colleges and universities. Students enrolled at foreign institutions are not eligible.
Some schools may also offer 10-month or 11-month academic programs, which would have different annual limits than those listed here. Check with your school’s financial aid office to get the limits for your program.
Other Direct Loan Limits
Additional Loan Funds for Preparatory Coursework
- All students: Up to $2,625 for coursework required for enrollment in an undergraduate degree or certificate program
- Bachelor’s degree recipients: Up to $5,500 for coursework required for enrollment in a graduate or professional degree or certificate program
- Bachelor’s degree recipients: Up to $5,500 for state-required teacher certification coursework
These loan funds are limited to a period of 12 consecutive months.
If Parents Refuse to File the FAFSA
If a dependent undergraduate student’s parents refuse to complete the FAFSA (Free Application for Federal Student Aid), the college’s financial aid administrator may allow the student to borrow additional Direct Unsubsidized Loans despite the incomplete FAFSA. The student, however, will not be eligible for the Direct Subsidized Loan, the Federal Pell Grant, or other forms of Title IV federal student aid.
Increased Direct Unsubsidized Loan Limits for Dependent Undergraduate Students
There are times when a dependent student can become eligible for the same Direct Unsubsidized Loan limits as independent students:
- Parents are denied eligibility for a Parent PLUS Loan
- Other documented "exceptional circumstances," even if parents aren’t denied eligibility for a Parent PLUS Loan
In some circumstances, college financial aid administrators may allow a dependent undergraduate student to borrow at the higher Direct Unsubsidized Loan limits available to independent students without requiring the parent to obtain a denial of a Parent PLUS Loan.
Examples of these parental circumstances:
- Only income is public assistance or disability benefits
- Whereabouts are unknown
- Bankruptcy with a court condition that prevents the parent from incurring additional debt
- Unable to repay the Parent PLUS Loan due to existing debt burden
- Unable to repay the Parent PLUS Loan due to a high debt-to-income ratio
- Ineligible for the Parent PLUS Loan because the parent is not a U.S. citizen or permanent resident, or is unable to provide evidence from the U.S. Citizenship and Immigration Service that he or she is not in the U.S. temporarily, and intends to become a citizen or permanent resident.
The parent must be unable to borrow and/or repay a Parent PLUS Loan because of these circumstances. Unwillingness to borrow is not enough to justify the higher Direct Loan limits.
College financial aid administrators aren’t required to make the student eligible for the higher loan limits, even if exceptional circumstances exist.
Prorated Annual Loan Limits for Undergraduate Students
Annual loan limits for Direct Loans are prorated (adjusted) for undergraduate students who are enrolled in programs that are:
- Shorter than one academic year; or
- Remaining period of study is shorter than one academic year
For example, if an undergraduate student in a 4-year Bachelor’s degree program will be graduating at the end of the fall semester (halfway through the academic year), the student is eligible for half of the annual loan limit for seniors.
Half-time students are eligible for the same annual loan limits as full-time students.
Perkins Loan Limits
Perkins Loans are federal student loans that are awarded based on exceptional financial need. College financial aid administrators have the ability to decide which students receive a Perkins Loan and how much they will receive, subject to the annual and aggregate loan limits, as well as available funding.
Note that each college has a limited allocation of Perkins Loan funding from its revolving loan pool, so actual loan amounts are often much lower than the annual and/or aggregate loan limits.
The aggregate loan limits for students attending graduate school or professional school include any undergraduate Perkins Loan debt.
Direct PLUS Loan Limits
The annual loan limit for the Direct PLUS Loan (Parent PLUS Loan or Grad PLUS Loan) is the annual cost of attendance minus other aid received during the enrollment period. There is no aggregate loan limit. The loan limits are the same for both parents of undergraduate students as well as graduate students.
Direct Consolidation Loan Limits
There are no limits on Direct Consolidation Loans (also known as Federal Consolidation Loans), other than the underlying limits on the loans included in the consolidation loan.
- File the FAFSA every year to maintain your eligibility for student aid.
- When you compare different types of student loans, make sure you understand both the annual and aggregate loan limits.
- If you are a dependent undergraduate student and your parents won’t qualify for a Parent PLUS Loan due to an adverse credit history, encourage them to apply anyway because a denial will make you eligible for the same Direct Loan limits as an independent student.
- If you’ve hit the annual and/or aggregate limits on federal loans, but you still need additional funds to complete your education, consider private student loans as a potential option.