Student Loan Limits: How Much Can You Borrow in 2021?
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.
Is There a Limit On Student Loans?
Yes. Most student loans have several types of limits on the amount you can borrow.
Annual Student Loan Limits
An annual limit specifies the maximum amount you can borrow in a single academic year in each loan program for which you are eligible.
Aggregate Student Loan Limits
An aggregate limit, sometimes called a cumulative limit, specifies the total amount you are allowed to borrow through each loan program. One of the most common loan programs, the federal Direct Stafford Loan program.
Cost of Attendance Loan Limits
Your financial aid office is not allowed to offer you financial aid in excess of your cost of attendance. Your cost of attendance is determined by your school for each academic year you are enrolled. The cost of attendance will include costs like, tuition, fees, as well as, housing, meals, transportation, etc. Now to apply this to the way you're awarded financial aid. Your school will typically add student loans to your financial aid offer after they apply your scholarships, grants, and work-study aid. Meaning, the cost of attendance (COA) limit is your 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 your school's determined 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.
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 2020-2021 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.
| Year | Annual Limit | Amount Borrowed | Aggregate Debt | Remaining Aggregate Loan Eligibility |
|---|---|---|---|---|
| First Year (Freshman) | $5,500 | $5,500 | $5,500 | $25,500 |
| Second Year (Sophomore) | $6,500 | $6,500 | $12,000 | $19,000 |
| Third Year (Junior) | $7,500 | $7,500 | $19,500 | $11,500 |
| Fourth Year (Senior) | $7,500 | $7,500 | $27,000 | $4,000 |
| Fifth Year (Senior) | $7,500 | $4,000 | $31,000 | $0 |
Private Student Loan Limits
Private student loans usually have an annual limit equal to the cost of attendance minus other financial aid (including accepted federal student loans). 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.
Even though you are working with a private student loan lender, your school will still certify the total amount you are able to borrow. Your school will let your lender know if adjustments needs to be made in order to ensure you are not offered financial aid (which includes student loans) in excess of your cost of attendance minus other aid received.
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, or Direct PLUS Loan)
- Dependency Status (Dependent or Independent)
- Year in School or Grade Level (Freshman, Sophomore, Junior, Senior, or Graduate Student)
- Health Professional Student
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. This can get a little tricky is you are transferring in the middle of an academic year. Your school will essentially let you borrow the difference between your annual loan limit at the new school and the amount received at the previous school. All loans borrowed through a loan program (i.e., Direct Stafford Loans) will count towards your aggregate loan limit.
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.
When it comes to the Direct Stafford Loan program, it's important to remember there are two types of loans in the this loan program: Direct Subsidized Loans and Direct Unsubsidized loans. Although these loans are part of the same program, Direct Subsidized Loans have their own limits.
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.)
One more thing to keep in mind, beyond annual and aggregate loan limits, there is a maximum eligibility period for you to receive Direct Subsidized Loans. For first-time borrowers whose first loan was obtained on or after July 1, 2013, there is a maximum eligibility period of time that you can receive Direct Subsidized loan funds.You are only able to receive Direct Subsidized loans for no more than 150% of the published length of your program.
For example, if you are enrolled in a four-year degree program, the maximum amount of time you can receive Direct Subsidized loan funds is 150% of four years, which is six years.
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
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.
| Health Professions Programs Eligible for Higher Direct Unsubsidized Loan Limits |
Direct Unsubsidized Loan Limit
9-Month Academic Year
|
Direct Unsubsidized Loan Limit
12-Month Academic Year
|
|---|---|---|
|
$40,500 | $47,167 |
|
$33,000 | $37,167 |
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. Any loans received for preparatory coursework will be counted towards your Direct Loan aggregate loan limits.
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 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 exceptional 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.
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.
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.
Recommendations
- 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.
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