How To Get The Most Financial Aid Per Semester
Federal financial aid is calculated a little differently by each school, but they all use your FAFSA number to determine your specific financial need. You should always provide accurate and truthful information on your FAFSA. Lying about income or moving money around can cause you to lose your award and be barred from receiving federal financial aid for the rest of your education. There are several ways to get enough financial aid to cover the cost of your post-secondary education, either from the federal government, your state government, and/or your school.
- Find merit-based scholarships to apply for, both through your college and from nonprofits or for-profits.
- Complete your FAFSA information early since some money is first-come, first served.
- Research other sources of income, like private student loans.
Need-based aid and federal student loans are the major sources of monetary support for students all over the United States, but they are not the only options to help you get through school. You could qualify for state-based grants and scholarships, which also use the FAFSA to determine your eligibility. Hobbies, good grades, and many other skills can help you qualify for merit-based scholarships through your college or from businesses outside your institution.
Federal Borrowing Limits For Dependent Undergraduates
| Year in school | |
|---|---|
| $31,000 | $23,000 |
If you depend on your parents for support, youre considered a dependent student. Dependent undergraduate students can take out $5,500 to $7,500 in federal student loans each year in theyre in school, up to a total limit of $31,000. If your family qualifies, up to $23,000 of your total borrowing can be in subsidized loans.
If you hit your annual or total borrowing limit and your parents cant qualify for a PLUS loan, the higher loan limits for independent undergraduates apply.
How Much Should I Borrow In Loans
Read the school award letter carefully, because it may not include all costs. It may list tuition but not room and board, for example. Or it may omit the expected cost of books, supplies and fees. It’s important to consider all expenses when planning how much you need to borrow each year.For example, if you have to fly or drive a long distance to the school, remember that you may need to do this a few times a year. You may also incur class fees: Art students may need to replenish paints or sculpting materials, or chemistry class might require goggles. Factor in costs for dorm supplies . Allow for some spending money for treats like the occasional meal away from the dining hall or special activities like concerts and sporting events.
As a general estimate, the Consumer Financial Protection Bureau suggests not taking out more in student loans than you could earn in the first year after graduation. The U.S. Department of Labor’s career search tool or its Occupational Outlook Handbook can help you determine starting salaries in your chosen field.It may be possible to negotiate your aid package. Among other things, ask if:
- School-based aid could be renewable each year
- The school has other aid sources you could apply for
- The school will match financial aid packages offered by other colleges
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Federal Direct Student Loans
The table below shows the breakdown of the maximum amount you can borrow when taking out direct subsidized and unsubsidized student loans. Note that the total for each year, and cumulatively, includes both subsidized and unsubsidized federal loans. If, for example, your subsidized loan total in year one as a dependent undergrad is $3,500, you are limited to $2,000 in unsubsidized loans for that year. If your subsidized total is less than $3,500, the difference between that and $5,500 can be unsubsidized loans.
The amount you can borrow each year and cumulatively as an undergrad is also affected by your parents’ eligibility to help you by taking out a direct PLUS loan. If they are eligible, the amount you can borrow in your own name is less. If they are ineligible, due to poor credit, for example, you can borrow more. Amounts for independent undergrads also reflect lack of parent supportas do amounts for graduate and professional students, who are always considered to be independent.
| Dependent Undergrads | Subsidized |
|---|---|
| $138,500 |
The aggregate total for each class of borrower includes all unpaid loan balances for all federal student loans taken. This includes subsidized and unsubsidized FFEL loans, which are no longer available, in addition to subsidized graduate level loans dispersed before July 1, 2012.
To apply for federal student loans, you’ll need to submit the Free Application for Federal Student Aid .
Undergraduate Federal Loan Limits
If your parents financially support you, then youre considered a dependent student. Federal student loan limits for dependents are $5,500 to $7,500 each year, up to a lifetime limit of $31,000.
You may be considered independent if you are over the age of 24, a military veteran or married, or if you financially support yourself. Independent students can borrow $9,500 to $12,500 annually and up to $57,500 total. If youre a dependent undergrad but your parents dont qualify for a parent PLUS loan, you may be able to borrow up to the federal student loan limits for independent students.
| Year in school |
| Up to the cost of attendance, minus any other financial aid received |
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Comparing Student Lines Of Credit With Government Student Loans
There are pros and cons to both government student loans and student lines of credit. With a line of credit, youll have to pay back the money that you withdrew from your available credit. You may also get more money from a line of credit than a government student loan.
However, the money you borrow using a student line of credit isnt eligible for the Repayment Assistance Plan. This plan helps students who are having trouble paying back their government student loan.
Do All Federal Student Loans Have The Same Limit
The Department of Education has set strict limitations on the amount college students can borrow based on several factors, including dependency status, year in school, and other financial aid received. This is included in the Free Application for Federal Student Aid .
Even if multiple federal loans are available to you, though, some should take priority over others.
For example, federal subsidized loans can be much more affordable than unsubsidized loans. Thats because the government pays any interest that accrues on that loan while youre still in school. With unsubsidized loans, the interest just builds.
Additionally, youll find that certain federal loans have different maximum borrowing limits depending on whether youre considered a dependent student or an independent one. This designation is based on factors like age, marital status, occupation or grade level.
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What Happens If You Hit Federal Loan Limits
If your cost of attendance exceeds what you can borrow in federal student loans, you may not have enough cash on hand to cover the extra costs. If youre worried about not having enough money to pay for school, you have a few options, including:
Working part-time. Find a job that lets you work non-traditional hours so you can pay for school. You can look on- or off-campus, depending on your living situation and transportation options. Consider a side-hustlelike delivering groceries, tutoring or freelancingto cover your extra schooling costs.
Requesting payment assistance. Many schools require payment in full, whether that comes from your lender or you. If you cant pay your outstanding bill, talk to your schools financial aid office about a payment plan, like making monthly payments instead of one lump-sum payment. Also inquire about emergency grants or interest-free loans, which vary by school but might be available based on your need.
Switching schools. Cost of attendance varies by each school. Since every institution has different service fees, you might pay more at a private or big-name school compared to community colleges, which tend to have fewer fees. If you can, consider attending local colleges for the first couple years and then transferring to your school of choice to complete your bachelors degree.
How Much Money You Should Borrow
This is often a very personal question to answer, and one that has to be carefully considered by each family. Try not to mix the emotion of wanting to attend a particular college with the reality of the ability to pay for it. Keep the following factors in mind when deciding how much money to borrow through student loans.
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Do Federal Student Loan Limits Change
There are two ways in which you can expect federal student loan limits to change. The first thing to know is that federal loan limits increase as a student advances in school. So, a third-year student will have more available federal loan funding than a second-year student, who will have a higher limit than a first-year student.
Additionally, the federal government adjusts the loan limits periodically, taking into consideration factors like inflation.
How Much Can You Borrow In Student Loans
Student loans arent limitless. The maximum amount you can borrow depends on factors including whether theyre federal or private loans and your year in school.
Undergraduates can borrow up to $12,500 annually and $57,500 total in federal student loans. Graduate students can borrow up to $20,500 annually and $138,500 total.
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But just because you can borrow that much doesnt mean you should. To keep higher education affordable, calculate how much you should borrow for college based on your expected future earnings and aim to keep your student borrowing below that amount.
Federal student loan limitsThe maximum you can borrow depends on your year in school, your status as a dependent or independent student, and the type of loan. There are three main types of federal student loans: Direct subsidized, direct unsubsidized and direct PLUS.
To apply for federal student loans, submit the Free Application for Federal Student Aid this FAFSA guide walks you through the process.
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Maintenance Loan For Living Costs
You may have to give details of your household incomeâ this can affect how much you get.
The loan is paid directly into your bank account at the start of each term. You have to pay the loan back.
| 2020 to 2021 academic year | 2021 to 2022 academic year | |
|---|---|---|
| Living at home | ||
| You spend a year of a UK course studying abroad | Up to £10,539 | Up to £10,866 |
You may not get the full amount, so you may have to find other ways to fund the rest of your living costs. This could include, for example, part-time work, local authority assistance, bursaries, scholarships, or family contributions.
You can use the student finance calculator to estimate how much Maintenance Loan youll get â it will also tell you if youre eligible for extra grants or allowances.
If youre 60 or over on the first day of the first academic year of your course you can apply for up to £4,014.
You must report any changes to your living arrangements in your online account, so you get the correct amount of student finance. You might need evidence of any changes.
Before Borrowing From A Student Line Of Credit
You may be able to pay for your education without having to borrow any money at all. For example, you may be able to use your savings or grants, bursaries or scholarships. A part-time job or co-op program can also help you cover the costs of education.
Find out if you’re eligible for scholarships, bursaries and grants from the Government of Canada:
The provinces and territories also offer grant and bursary programs for their permanent residents. You may still be eligible for provincial or territorial grants or bursaries even if you dont have a Canada Student Loan.
To learn about grant and bursary programs in your province or territory, check with your provincial or territorial student financial assistance office.
Find your provincial or territorial student financial assistance office.
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Maximum Allowable Loan Amounts For Federal Stafford Loans
Students borrowing a Federal Stafford loan, including subsidized and/or unsubsidized, are subject to the following loan limits:
- Annual Maximum Loan Limit: Restricts the total amount of Stafford loans that may be borrowed during a single academic year .
- The combined total cannot exceed your Cost of Attendance minus other financial aid or the maximum academic year amount allowable by law, whichever is less.
Please note: First-time undergraduate borrowers on or after July 1, 2013, have a limit on the period of time they may receive subsidized Stafford loans. The time period is measured in academic years.
The maximum annual amount you can borrow in federal subsidized and/or unsubsidized loan is determined by your grade level and dependency status. Learn more about your dependency status by visiting our Dependency Status Page.
Annual Maximum Loan Limits
How To Calculate Your Student Loan Payment
On a typical repayment plan, your student loan payment will depend on your total loan amount, your interest rate and your repayment term. If you opt for a shorter repayment plan, your monthly payments will be higher than if you select a longer repayment plan, even if the principal loan amount is the same.
To calculate your student loan payment and to see how that payment changes based on different loan amounts, interest rates and terms, use a student loan calculator. You can also see how your payment will change if youre able to put extra payments toward your loan.
If youre using an income-driven repayment plan, the calculation is a little different. In these cases, your student loan payment will not use your loan amount. Instead it looks at your discretionary income calculated according to your total income and family size and charges you 10 or 15 percent of that amount.
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How To Pay Less Interest
You can reduce the amount you pay in interest or by refinancing your student loan to a loan with a lower interest rate. However, refinancing federal student loans into a private loan means a loss in many benefits income-driven repayment options, possible loan forgiveness or widespread forgiveness, generous deferment options, and a death and disability discharge.
Graduate Federal Student Loan Limits
If youre a graduate or professional student, youre not given the option to be a dependent student for purposes of federal financial aid. All graduate students are considered independent and arent eligible for subsidized loans.
Instead, graduate students can borrow as much as $20,500 in unsubsidized loans annually and $138,500 total, including undergraduate loans.
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What Is A Student Loan
If you dont have the money to pay for college, a student loan will enable you to borrow money and pay it back at a later date, with interest.
College loans are different from a grant or scholarship. If you receive a grant or a scholarship youre not borrowing that money. That is money that has been given to you as a gift and doesnt need to be repaid.
How Hard Is It To Get A Home Equity Loan
Qualifying for a home equity loan is similar to qualifying for a mortgage. Youll have to prove creditworthiness, or that you can repay the loan. Lenders will check your credit score, income, debt-to-income ratio and maximum loan-to-value ratio. Lenders typically prefer your DTI to be less than 43% and an LTV of no more than 80%.
Lender requirements vary but, in general, youll need to have at least 20% equity in your home to qualify for a loan.
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Determine How Much You Can Earn
Coming in second only to securing free money, the best way to reduce the amount that you should borrow in student loans is to work. You can choose to work a job over the summer or one of your other school breaks, or you can do work-study during the school year, which is a federal student aid program that allows you to earn a part-time income while you go to school.
Although you may not be able to cover all of your expenses, you can likely reduce the amount that you need to cover your living expenses and possibly part of your tuition.
In lieu of a job or work-study, consider participating in an AmeriCorps program to help cover the cost of your tuition for a few semesters.
How Much Will You Borrow In Total
Find out how long it takes most students to get an undergraduate degree from the college under consideration, and then determine if your student needs a graduate degree to enter a particular profession. This should give you a rough idea of how much you will need to borrow over the four to ten years, or more, that it can take to complete an education.
Also, pay attention to items like scholarships, 529 savings, and whether your student can work during school to help reduce how much they need to borrow.
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