How much can I borrow in student loans for college? This is a very common question asked by soon to be college students. Hopefully the following explanation can help clear up this common student loan question. There are two different types of student loans for college, federal student loans and private student loans. Federal student loans are acquired by filing a FAFSA, Free Application for Federal Student Aid, and are the first student loans you should apply for. How much you can borrow in federal student loans for college, is broken down in the following:
Perkins Loans: Undergraduates can receive up to $5,500 a year (maximum of $27,500) and Graduate Students can receive up to $8,000 a year (maximum of $60,000, including undergraduate loans). The amount you receive will depend on financial need, amount of other aid received and the availability of funds at your school.
Stafford Loans (subsidized and unsubsidized): Amount received will depend on your grade level in school and dependency status. Financial need is a factor for subsidized loans, but is not for unsubsidized loans.
PLUS Loans: The amount received is based upon the equation of The Student’s Cost of Attendance minus Other Aid Received.
If this seems a little complicated to understand, just know that it is best to file a FAFSA before looking into your private student loan options. Federal student loans often offer the best interest rates and repayment options to borrowers. After you file a FAFSA, you will receive a Student Aid Report, which will outline the amount of federal financial aid you have qualified for. If the amount of federal financial aid is not enough to cover your college expenses, then you may want to take a look at a private student loan to bridge the gap.
For private student loans, how much you can borrow is a bit different. Private student loans are based on credit, and each lender’s terms, rates and lending amounts can vary based upon your credit and qualifications. If you have poor or little credit history, chances are you will need a creditworthy cosigner in order to secure a private student loan.