It's a common misperception that student loans are not considered financial aid because the student has to pay it back. However, it is considered financial aid because student loans are awarded only for educational expenses. For this reason, student loans are totally different from just going to a bank and taking out a personal loan.
How is my loan eligibility calculated?
Subsidized loans are need-based, which means your FAFSA information is taken into consideration when calculating eligibility. Loan amounts are calculated by taking your academic year student budget minus the Expected Family Contribution from the FAFSA minus other financial aid you are receiving.
Unsubsidized loans are not need-based. Therefore, the Expected Family Contribution is excluded when determining unsubsidized loan eligibilty. Loan amounts are calculated by taking your academic year student budget minus other financial aid (including the Subsidized loan).
It's possible to have a combination of both subsidized and unsubsidized loans awarded to you for the same academic year depending on your eligibility. Keep in mind that the class level limits I outlined in my last post do apply.
You've talked about undergraduate loans, but what about graduate loans?
Graduate loans are calculated in the same way as undergraduate loans, but students pursuing a graduate degree program have higher loan maximums for an academic year:
- $8,500 Subsidized
- $12,000 Unsubsidized
Students in a graduate degree program can also request the new Grad PLUS, which is similar to the parent PLUS loan for an undergraduate dependent student. It's to your benefit to take out the Subsidized and Unsubsidized loans first, but the Grad PLUS can be in addition to these other loans if you have remaining eligibility. There is no federal limit on the Grad PLUS, but the Grad PLUS loan and other aid (including Subsidized and Unsubsidized loans) cannot exceed your budget.
Is there a limit on lending during my entire college experience?
There are federal aggregate limits on how much you can borrow during your entire undergraduate and graduate education. The Stafford Loan and Direct Lending programs share the same aggregate amounts that you can borrow while achieving your education. These are maximums in which you can borrow through either program based on your degree program and dependency status. Based on your status, you can not exceed these loan amounts for your entire education:
Undergraduate degree:
- Dependent: maximum $23,000 Subsidized and Unsubsidized combined
- Dependent with PLUS loans denied: maximum $46,000 between Subsidized and Unsubsidized (Subsidized cannot exceed $23,000)
- Independent: maximum $46,000 between Subsidized and Unsubsidized combined
Graduate degree:
- Subsidized: maximum $65,500 including undergraduate loans borrowed
- Subsidized and Unsubsidized combined: maximum $138,500 including undergraduate loans borrowed
- Grad PLUS: no federal limit
All student loans are subject to eligibility. It is not a guarantee that you will qualify for the maximum amounts. Eligibility depends on your budget, Expected Family Contribution, and other financial aid. Your financial aid office will determine your loan amounts.