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Federal Student Loan Limits and Factors Determining Them

federal student loan limits

A federal student loan is an excellent opportunity to cover the costs of education. Besides providing favorable terms, such funding options are also eligible for forgiveness, discharge or cancellation programs. However, one downside of federal funding is that it has limitations. A student cannot borrow more than the available amount. Plus, there exist some time limits for subsidized loan borrowers. In general, federal student loan limits depend on several factors, such as the type of loan, year of study, dependency, etc. Hence, in this guide, we will present loan amount limitations for different categories of borrowers. 

What Type of Federal Loans Exist?

Before we start discussing the federal student loan limits, it is better to understand what type of loans a student can be eligible because limits can depend on the loan type. In general, federal loans have two categories, Direct Subsidized and Direct Unsubsidized, to assist students in educational costs. They can get access to a student loan if they study one of these institutions:

  • 4-year college or university
  • Community college
  • Trade, career, or technical school

Sometimes it is possible to notice that people or organizations refer to these loans as Stafford Loans. No matter what it is called, this funding option has two categories, subsidized and unsubsidized loans. The main difference between them is that subsidized funding provides better loan terms. 

Direct Subsidized Loans

This funding opportunity is available to undergraduate students who struggle to cover educational expenses. The amount of the loan depends on the school, and it cannot be greater than what the student needs. However, we will discuss the details of federal student aid loan limits in the subsequent section. When it comes to interest payments, a student is not obliged to start loan repayment until he/she graduates. In other words, if a student still studies, is in grace or deferment period, there is no need to worry about interests. During these times, the Department of Education covers the payment. Once borrowers graduate and the grace period ends(usually six months), they can meet the debt obligations. 

Direct Unsubsidized Loan

This type of federal aid is accessible to both graduates and undergraduates. Different from subsidized loans, there exists no obligation to prove the financial need. When it comes to federal student loan limits, it depends on the school attended, cost of education, and other financial support a borrower receives. More details for this federal student loan aggregate limits will be discussed. Another difference from subsidized loans is that a borrower should repay the debt in all periods with no exception. This requirement is what makes subsidized loans have better loan terms. A borrower can still choose not to pay the student debt during studies or grace period. However, the interest payments will continue accumulating and added to the original debt balance. 

What Factors Influence Federal Student Loan Limits?

Several factors affect the amount a borrower is eligible for federal aid. One of them is the type of loan, whether Direct Subsidized or Unsubsidized. As you are already familiar with these terms, we can move to other elements. It is usually the task of the school to determine the loan limits for federal student loans. Depending on what degree program is pursued and the type of the loan, the school decides on the loan amount for an academic year. However, besides annual limits, there exist federal student loan aggregate limits which indicate the maximum amount of debt for the entire study period.

Another factor that affects loan amounts is the independence of the student. Dependent students whose parents are not eligible for PLUS loans can receive additional unsubsidized funds. Independent students can be:

  • At least 24 years old
  • Married, or dependency on someone other than a spouse 
  • Veteran or member of armed forces
  • Orphan, homeless or has a risk of being homeless
  • Graduate or professional student
  • Ward of court
  • Emancipated minor

Lastly, federal student loan limits depend on the year of the studies. 

First-Year Undergraduate Loan Amount

Usually, as years pass, students become eligible for higher amounts of loans. If a borrower wants to get subsidized loans, he/she can qualify for up to $3,500, regardless of a dependent or independent student. However, for unsubsidized loans, federal student loan limits can be different. If a borrower is dependent, then the limit is $2,000, while for an independent borrower, this amount can reach up to $6,000. 

Second-Year Undergraduate Loans

Again, for second-year students, the subsidized loan amount is the same for dependent and independent ones. However, this time, the amount is higher than the first year loan limit, which is $4,500. The rates for unsubsidized student loans do not change for dependent and independent students, $2,000 and $6,000, respectively. 

Third Year and Beyond Graduate Loan Limits

For third-year dependent and independent students, the subsidized federal student loan limits increase to $5,500. Also, independent borrowers can get $7,000 instead of $6,000. 

Debt for Graduate and Professional Students

This group of borrowers is not eligible for subsidized loans, as mentioned above. Besides, they are considered independent students. Therefore, only unsubsidized loans are accessible to them, which can be up to $20,500 annually. 

Aggregate Limits

If a student wants to get federal support on educational costs, it is advisable to consider federal student loan aggregate limits. Starting from the undergraduate level, subsidized loans have an aggregate limit of $23,000 for dependent and independent borrowers. Meanwhile, dependent borrowers can get up to $8,000 unsubsidized loans while this amount reaches $34,500 for independent ones. Lastly, graduate and professional students are eligible for $65,000 and $73,000 federal loan for subsidized and unsubsidized categories, respectively. It should also be noted that aggregate limits cover all loans that a borrower receives for study. 

Time Limit

Besides limitations on the loan amount, there exist time limits for the borrowers. Generally, such barriers are for the borrowers who got the debt on or after July 2013. However, the limitation only affects the subsidized loans. A borrower cannot receive subsidized debt for more than 150% of the length of the program. If a student wants to get unsubsidized loans or PLUS loans of parents, do not involve such problems. 


Federal funding can be a better option for covering educational costs than its alternatives, such as private lenders. Favorable loan terms and the existence of loan forgiveness programs make this funding method a fantastic opportunity. However, it also bears some limitations. There exist federal student loan limits in terms of amount and time. Several factors determine these limits. For instance, first-year students are usually eligible to lower amounts of debt than third-years. Also, graduate and undergraduate borrowers, as well as dependent and independent students, face different loan limits. Hence, it is better to understand if the limitations allow a student to study with no worries before applying for the loans. Students should also keep in mind that just because they can get more debt does not mean that they should receive the maximum amount. Try to calculate what you need and can afford and do not exceed this amount.