Yes, There’s a Limit to Federal Student Aid — Here’s How Much

maximum student loan amount

“So I guess I can’t get any more financial aid this semester,” the text read. “I’m going to have to pay my tuition out of pocket.”

I stared at my phone for a few seconds, not comprehending what I was reading. My boyfriend’s financial aid had run out. How was that possible? And where was he going to get that tuition money?

As I quickly learned, the federal government has a maximum student loan amount — and once you reach it, you aren’t allowed to borrow more.

Here’s what to do if you’re about to hit that ceiling.

What is the maximum student loan amount?

Federal student loan limits are based on several factors:

  • Type of schooling: undergraduate or graduate
  • Student status: dependent or independent
  • Annual vs. aggregate: per year vs. per lifetime

This chart from the Pennsylvania State University student aid office breaks down the limits depending on your situation:

Dependent Undergraduate Student Dependent Undergraduate Student with a Parent PLUS Loan Denial Independent Undergraduate Student Graduate or Professional Degree Student
First Year (0-29 credits) $5,500. A maximum of $3,500 may be subsidized. $9,500. A maximum of $3,500 may be subsidized. $9,500. A maximum of $3,500 may be subsidized. $20,500
Second Year (29.1-59 credits) $6,500. A maximum of $4,500 may be subsidized. $10,500. A maximum of $4,500 may be subsidized. $10,500. A maximum of $4,500 may be subsidized. $20,500
Third, Fourth, and Fifth Years (59.1+ credits) $7,500. A maximum of $5,500 may be subsidized. $12,500. A maximum of $5,500 may be subsidized. $12,500. A maximum of $5,500 may be subsidized. $20,500
Aggregate Maximum Loan Amount $31,000. A maximum of $23,000 may be subsidized. $57,500. A maximum of $23,000 may be subsidized. $57,500. A maximum of $23,000 may be subsidized. $138,500. The graduate debt limit includes Direct Loans received for undergraduate study.

My boyfriend, an independent undergraduate student, had hit the cap of $57,500.

He was getting a second bachelor’s degree — and since it was the same level of schooling, he hit the maximum amount of student loans after only two semesters. If he wanted to go on to get a master’s degree, he could take out more (but that’s another conversation).

Although they aren’t technically student loan limits, there are two other limitations to be aware of:

  1. You can’t exceed the cost of attendance at your school; in other words, you can’t take out more loans than you actually need.
  2. You can receive Direct Subsidized Loans only for your maximum eligibility period, which is “150 percent of the published length of your program” — for example, six years for a four-year bachelor’s degree or three years for a two-year associate’s degree.

What to do if you hit the maximum student loan amount

If you’ve borrowed the maximum amount of student loans — or are close to it — here are four steps you can take.

1. Talk to your financial aid office

The federal government isn’t the only place that offers aid; states and colleges have programs too.

So talk to your financial aid office and ask if there’s anything it can do. Perhaps it can offer some need- or merit-based aid or recommend a local scholarship program. It also might be able to help you find aid from your state.

As one expert told Student Loan Hero, “There are things colleges can do above and beyond the formula — whatever the methodology — to determine additional funding.”

2. Drop down to part time

If you discover you’re about to hit the student loan ceiling, decreasing your course load will lower your costs and give you time to work while attending school. By doing so, you’ll hopefully be able to cover your tuition without taking on additional loans.

As for the federal loans you’ve already taken out? If you’re enrolled in classes half time, your loans will remain in deferment — which means you won’t need to make payments on them.

If they’re subsidized loans, the government will cover the interest. But if they’re unsubsidized loans, you might want to start making minimum payments to avoid ballooning interest charges.

3. Dip into your emergency or retirement savings

Although it’s never ideal to spend your savings, sometimes it’s necessary.

When my boyfriend ran out of financial aid, we dipped into our joint emergency fund to help pay for his tuition — and have been slowly building it back up ever since.

If you’ve been in the working world for a while, you could tap your retirement savings for tuition. For example, if you’ve had a Roth IRA open for more than five years, you can withdraw contributions for your education penalty- and tax-free.

Think long and hard before you do so, however. The best thing to do with retirement investments is let them sit and grow.

4. Consider private student loans

One final option to consider is private student loans. Since they aren’t offered by the federal government, they aren’t subject to traditional student loan limits.

You can obtain private student loans from a variety of lenders, including big brick-and-mortar banks and smaller online startups.

Although these loans have fewer restrictions than federal loans, their interest rates are higher. And you’ll probably need a cosigner (unless, of course, you’ve already been in the workforce and have established credit of your own).

Before you take on any additional loans, make sure you understand the terms — and how much you’ll end up paying in the long run. (You can use our student loan payment calculator to run the numbers.)

Taking on an additional $30,000 at a 9.00% interest rate, for example, will lead to monthly payments of $380 when you graduate and a total of $15,603 in interest over 10 years. Add that to the federal loans you already have, and you could be overwhelmed by debt when you graduate.

If you’ve hit the maximum student loan amount, don’t panic. Take a few deep breaths and carefully consider your options.

And remember: Whatever you take out, you’ll have to pay back.

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