Subsidized Loan Limits Explained for College Students

As a college student, navigating the world of subsidized loans can be overwhelming. The good news is that there are limits to how much you can borrow, which can help prevent financial strain.

The maximum amount you can borrow in subsidized loans is $3,500 for the first year, $4,500 for the second year, and $5,500 for each subsequent year.

These limits apply to undergraduate students, and the amount you're eligible for may be lower depending on your financial need and other factors.

Federal Loan Limits are determined by your dependency status, the number of credits you've earned, and other aid you may be receiving. Students who advance in grade level mid-year may be eligible for an increase in Direct Loan eligibility.

Undergraduate students have annual loan limits based on their grade level and dependency status. For dependent students, the annual loan limit increases as they progress from freshman to senior status.

Here are the annual loan limits for undergraduate students:

Graduate and law students have different loan limits. To be eligible for Graduate/Law loan limits, law students must be enrolled in at least 6 credit hours that can be applied to the Law program requirements, while graduate students must be enrolled in at least 3 credit hours starting in Summer 2019 (6 credit hours minimum prior to Summer 2019).

The annual maximum loan limits for subsidized and unsubsidized loans vary depending on your grade level and status as a dependent or independent student.

Dependent students can borrow up to $5,500 per year with no more than $3,500 subsidized as freshmen with 0-29 credit hours.

Independent students can borrow up to $9,500 per year with no more than $3,500 subsidized as freshmen with 0-29 credit hours.

Here's a breakdown of the annual maximum loan limits for dependent and independent students:

The maximum Direct Loan a student may borrow is determined by their dependency status, academic credits earned, and other aid they may be receiving. Students who advance in grade level mid-year may be eligible for an increase in Direct Loan eligibility.

To determine the maximum Direct Loan, consider the following grade levels and loan limits:

For Direct Subsidized and Unsubsidized Loans made between October 1, 2020, and October 1, 2025, the fee remains 1.057%. For Direct PLUS Loans made during the same period, the fee is 4.228%.

Annual Maximum Loan Limits are determined by Grade Level and Student Status.

Undergraduates have different annual loan limits based on their Grade Level and whether they are classified as dependent or independent.

For dependent students, the annual maximum loan limits are $5,500 for freshmen, $6,500 for sophomores, and $7,500 for juniors and seniors.

For independent students, the annual maximum loan limits are $9,500 for freshmen, $10,500 for sophomores, and $12,500 for juniors and seniors.

Graduate students are not eligible for subsidized loans and have annual maximum loan limits of $20,500.

PhD candidates in Human Services Psychology, Clinical Psychology Concentration ONLY have annual maximum loan limits of $33,000.

Students need to set a budget and plan ahead when it comes to loan limits.

Identify all your options and figure out how you can cover college costs in a way that maximizes other sources of college funding, such as savings, grants or scholarships — before loans.

Doing so will help you limit your student debt and avoid reaching federal student loan limits.

Anticipate any gaps in college funding and work to fill them before you near the loan limits.

If you're a first-time undergraduate borrower starting on or after July 1, 2013, there's a specific rule to keep in mind.

You may receive Federal Direct Subsidized Loans only up to 150% of the published length of your program.

For example, students enrolled in a four-year program may receive Subsidized loans for a period of six years, which is 150 percent of 4 years.

To learn more about these borrowing limits, be sure to visit the Federal Student Aid website.

First-time undergraduate borrowers who start their program on or after July 1, 2013, can receive Federal Direct Subsidized Loans for up to 150% of the published length of their program.

If you're a dependent student, you can borrow up to $5,500 in your first year, with up to $3,500 of that being subsidized. Independent students or dependent students whose parents are ineligible for a PLUS loan can borrow up to $9,500, with up to $3,500 of that being subsidized.

Dependent students typically increase their borrowing limit as they progress through their studies. For example, as a sophomore, you can borrow up to $6,500, with up to $4,500 of that being subsidized.

Here's a breakdown of the borrowing limits for dependent and independent students:

To be eligible for the graduate and law loan limits, you must be enrolled in a minimum of 3 credit hours (6 credit hours prior to Summer 2019) that can be applied to your program requirements.

The cost of subsidized loans can add up quickly, and it's essential to understand the fees associated with them. For Direct Subsidized and Unsubsidized Loans made between October 1, 2020, and October 1, 2025, the loan fees remain at 1.057%.

If you're a parent borrower or a Graduate/Professional student borrower, you're likely aware that Direct PLUS Loans come with different fees. For these types of loans made between October 1, 2020, and October 1, 2025, the fees are 4.228%.

Your college's financial aid office estimates the total educational cost of attending the school, including expenses like tuition, fees, books, room and board, and transportation for a given enrollment period.

This is known as the cost of attendance. It's an important number to know, as it affects your student loan limits.

The cost of attendance is calculated by subtracting federal grants, scholarships, work-study, and other student aid from the total educational cost. This will give you your student loan limit.

For example, if the total educational cost is $20,000 and you receive a federal grant of $5,000, your student loan limit would be $15,000.

The actual loan amount a student is eligible to receive may be less than the annual federal loan limit. This is because the lower of the two limits - the federal loan limit or the cost-of-attendance limit - always applies.

To find out your cost of attendance, you can check your college's website or contact their financial aid office directly. They can provide you with the information you need to understand your student loan limits.

Direct Subsidized and Unsubsidized Loans made to students have a loan fee of 1.057% for loans disbursed between October 1, 2020, and October 1, 2025.

Loans made to students have varying fees depending on the disbursement date, with those made prior to October 1, 2019 having different fees than those made between 2020 and 2025.

For Direct PLUS Loans made to parent borrowers and Graduate/Professional student borrowers, the loan fee is 4.228% for loans disbursed between October 1, 2020, and October 1, 2025.

Loans made to parent borrowers and Graduate/Professional student borrowers also have varying fees depending on the disbursement date, with those made prior to October 1, 2019 having different fees than those made between 2020 and 2025.

The aggregate limits for subsidized and unsubsidized loans are a crucial aspect of understanding your borrowing potential. You can borrow up to $31,000 as a dependent undergraduate student, with no more than $23,000 of that amount being subsidized.

For independent undergraduate students or those whose parents are ineligible for PLUS loans, the aggregate limit is $57,500, with no more than $23,000 of that amount being subsidized. This is a combination of Federal Direct Subsidized and Unsubsidized loans.

Graduate and professional students have an aggregate limit of $138,500, with no more than $65,500 of that amount being subsidized. This includes all federal loans received for undergraduate study.

Here's a breakdown of the aggregate limits for different student types:

It's essential to note that these aggregate limits apply to all subsidized and unsubsidized loans, not just the loan limits for each academic year.