- How Much You Can Borrow
- How Much You Should Borrow
- How to Borrow Less
- How to Borrow More
Find out how much you can get in student loans for your undergraduate or graduate degree.
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How Much You Can Borrow
The amount you can borrow from a student loan will depend on the type of loan you get, the length of your studies, your family’s income, and your school’s cost of attendance. The average student loan borrower has about $28,400 in student loan debt. If you’re a graduate student, you can usually borrow more than undergraduates.
Federal student loans
Federal student loans are available to undergraduate and graduate students, and their parents. The amount you can borrow depends on several factors, including your year in school, whether you’re enrolled full-time or part-time, and your financial need.
Direct Subsidized Loans are available to undergraduate students with financial need. The U.S. Department of Education pays the interest on these loans while you’re in school at least half-time, during your grace period, and during deferment periods.
Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need. Interest accrues on these loans while you’re in school and during grace periods and deferment or forbearance periods, and will be added to your loan balance (capitalized).
Direct PLUS Loans are available to graduate or professional students and parents of dependent undergraduate students. These loans require a credit check; if you have an adverse credit history, you may still receive a Direct PLUS Loan if you obtain an endorser who does not have an adverse credit history or if you document to the satisfaction of the U.S. Department of Education that there are extenuating circumstances relating to your adverse credit history. If your application is approved, the interest on a Direct PLUS Loan accrues while you’re in school and during grace periods and deferment or forbearance periods; it will be added to your loan balance (capitalized).
Private student loans
Private student loans are credit-based, meaning your credit score and credit history are considered when you apply. The lender will also look at your income and employment history. If you have a co-signer on your loan, their credit will also be considered.
Interest rates on private student loans are variable and depend on your credit history and the prime rate. Your interest rate will be set when you first take out the loan and can change throughout the life of the loan.
Most private student loans have a repayment period of 10 to 15 years, but some lenders offer repayment periods of up to 25 years.
How Much You Should Borrow
No matter your financial situation, you likely have multiple options to pay for college. You can use a mix of grants, scholarships, work-study, and student loans to cover your costs. But how much should you borrow?
Consider your future earnings
When deciding how much to borrow for your education, it’s important to consider your future earnings. It may be tempting to take out the maximum amount of student loans available to you, but remember that you will have to repay your loans with interest.
It’s also important to consider the impact of student loan debt on your future lifestyle. Will you be able to afford the monthly payments on your loans? Will you be able to save for a house or a car?
The best way to figure out how much you can afford to borrow is to use a student loan calculator. This tool will help you estimate your monthly payments and total repayment amount.
Remember, you don’t have to borrow the full cost of your education. You can cover some of the costs with savings, scholarships, or grants. And, you may be able to get a part-time job to help cover expenses.
Consider your other debts
When considering how much you should borrow in student loans, you’ll want to take into account your other debts. If you have high-interest debt, such as credit card debt, you may want to consider paying that off first before taking on more debt in the form of student loans. You’ll also want to consider your future earnings potential when taking on student loan debt – will you be able to afford the payments once you graduate? Make sure to consider all of these factors before taking out any loans.
Consider your financial safety net
When considering how much you should borrow in student loans, it’s important to factor in your financial safety net. This includes your savings, income from a part-time job, and contributions from family or friends.
Your safety net will help you cover unexpected expenses and make sure you can repay your student loans. If you don’t have a strong safety net, you may want to consider borrowing less so you’re not putting yourself at risk of defaulting on your loan.
How to Borrow Less
It’s important to understand how loans work before taking one out. Loans are a type of debt that you agree to pay back with interest. The first thing you should do is figure out how much you need to borrow. To do this, you’ll need to consider the cost of your education and how much money you have available to cover expenses.
Apply for scholarships
There are many different types of scholarships out there, and you may be surprised at how easy it is to find one that you qualify for. Here are a few tips on how to search for scholarships:
-Start by looking online. There are many websites that list scholarships by state, major, or other criteria.
-Check with your school’s financial aid office. They may have information on local scholarships that you can apply for.
-Ask your parents, grandparents, or other relatives if they know of any scholarships that you might be eligible for.
-Look for scholarships offered by companies or organizations that you or your family members belong to.
Applying for scholarships can take some time and effort, but it’s worth it if it can help you reduce the amount of student loans you have to borrow.
Apply for grants
Federal and state grants don’t have to be repaid, making them a very attractive option for students who need financial assistance. You may be able to get a grant from the federal government, your state government, or your college or university. To find out what might be available to you, start by visiting the websites of the federal government’s grant-making agencies, such as the Department of Education and the Department of Health and Human Services. You can also search for grant opportunities on the website of your state’s grant-making agency.
Work during school
Working during school is one of the best ways to minimize your student loan debt. Even working a part-time job during the school year can make a big difference in how much you need to borrow. If you can earn enough money to cover some of your tuition and other education-related expenses, you’ll have to borrow less money in student loans.
There are a few things to keep in mind if you’re thinking about working while you’re in school:
-Make sure that your job doesn’t interfere with your studies. Your primary focus should be on getting good grades and completing your degree.
-Look for a job that offers flexible hours so you can work around your class schedule.
-Don’t be afraid to ask for help from family and friends. They may be able to connect you with potential employers or give you suggestions for good places to look for a job.
How to Borrow More
You’re probably wondering how much you can get a student loan for, and the answer is that it depends. You can usually borrow up to the full cost of attendance, minus any other financial aid you receive. This means that if your school costs $20,000 per year and you receive a $10,000 scholarship, you could potentially borrow up to $10,000 in student loans.
Parent PLUS Loans
Parent PLUS Loans are federal student loans that parents and stepparents can use to help pay for college. The U.S. Department of Education (DOE) is the lender.
Like other federal student loans, Parent PLUS Loans have benefits that private student loans don’t. For example, Parent PLUS Loans:
-Have fixed interest rates
-Offer repayment plans that base your monthly payment on your income
-May be eligible for loan forgiveness if you work in certain public service jobs
To get a Parent PLUS Loan, your child must first file the Free Application for Federal Student Aid (FAFSA®) form to see if they’re eligible for need-based aid. If they are, the school will send you a Parent PLUS Loan Request form to complete and sign. Once you return the form to the school, they’ll contact the DOE to determine how much you can borrow.
Graduate PLUS Loans
Graduate PLUS loans are federally insured loans that graduate or professional students can use to help pay for their education. These loans have fixed interest rates and can be used to cover any education-related expenses, including tuition, room and board, and books.
To be eligible for a Graduate PLUS loan, you must first file a Free Application for Federal Student Aid (FAFSA®) form. Then, you will need to complete a Master Promissory Note (MPN) and undergo a credit check. If you have an adverse credit history, you may still be able to obtain a Graduate PLUS loan by getting an endorser or documenting extenuating circumstances.
Graduate PLUS loans are not need-based, so there is no maximum income limit. However, you can only borrow up to the cost of attendance minus any other financial aid you receive. For example, if the cost of attendance at your school is $20,000 and you receive $10,000 in other financial aid, you could borrow up to $10,000 in Graduate PLUS loans.
Interest accrues on Graduate PLUS loans from the time the loan is disbursed until it is paid in full. You can choose to pay the interest as it accrues or allow it to accrue and be capitalized (added to the principal balance of your loan). If you allow the interest to accrue and capitalize, your monthly loan payments will be higher because you will be paying interest on the interest that has accrued.
Private student loans
If you’re considering taking out a private student loan, you’ll need to researched the various lenders to find the best option for you. Remember, there are many factors to consider when taking out a loan, and not all lenders are created equal. It’s important to compare interest rates, repayment terms, fees and perks when shopping for a private student loan.
You can use a variety of resources to help you compare lenders, including:
-Your financial aid office
-The Consumer Financial Protection Bureau
-Online loan comparison tools
Depending on the lender, you may be able to get a private student loan with no cosigner. However, keep in mind that most students will need a cosigner in order to qualify for the best terms and rates. If you don’t have a cosigner, you may still be able to get a loan, but it may come with higher interest rates and less favorable terms.