Student loan amounts vary widely depending on the type of loan, your school, and your year in college

There is no single answer to how much a student loan costs because the amount you borrow depends on several factors: whether you attend a public university, private college, or for-profit school; whether you live on campus or commute; what state you live in; and how many years you study. Federal loans have borrowing limits set by law. Private loans have limits set by each lender based on your creditworthiness and the school's cost of attendance.

The total amount you owe at graduation is the sum of all loans you took out, plus any interest that accrued while you were in school. For federal loans, interest typically does not accrue while you are enrolled full-time. For private loans, interest often accrues immediately, meaning you owe more at graduation than you borrowed.

Key Takeaways

  • Federal undergraduate loans have annual borrowing limits that increase each year you are in school, ranging from $5,500 to $7,500 per year depending on your year and dependency status.
  • The total cost of attendance at your school — tuition, fees, room, board, and books — determines how much you can borrow in federal loans combined with private loans.
  • Private student loans have no federal borrowing cap and can go as high as the school's cost of attendance minus any other aid you receive.
  • Interest rates on federal loans are fixed by Congress and vary by loan type; private loan rates depend on your credit score and can be fixed or variable.
  • You will owe more at graduation than you borrowed if your private loans accrued interest while you were in school, or if you took out unsubsidized federal loans.

Federal loan borrowing limits for undergraduates

If you are an undergraduate dependent student (your parents claim you as a dependent on their taxes), you can borrow up to $5,500 in your first year, $6,500 in your second year, and $7,500 in your third and fourth years. These are annual limits, so the total you can borrow across four years is $27,000. These limits apply to the combination of subsidized and unsubsidized federal loans together.

If you are an independent undergraduate student (you do not may have access to as a dependent), your limits are higher: $9,500 in your first year, $10,500 in your second year, and $12,500 in your third and fourth years, for a total of $57,500 across four years. Independent students can borrow more because the government assumes they have less family financial support.

Graduate students have different limits. You can borrow up to $20,500 per year in unsubsidized federal loans, with a total limit of $138,500 across all graduate study (including undergraduate borrowing). Graduate students cannot borrow subsidized federal loans.

How school type and location affect what you pay

The cost of attendance varies dramatically by school. Public in-state universities averaged around $28,000 per year in total cost (tuition, fees, room, and board combined) as of the most recent data, though this varies by state. Public out-of-state universities averaged around $46,000 per year. Private colleges averaged around $60,000 per year. These are averages; your actual school may cost significantly more or less.

Your state of residence matters for public universities because in-state tuition is typically half the cost of out-of-state tuition at the same school. If you attend a private school, your state does not affect tuition, but some states offer grant programs that reduce what you need to borrow.

For-profit schools vary widely in cost. Some charge $15,000 to $30,000 per year; others charge $40,000 or more. The key difference is that for-profit schools often have lower graduation rates and higher default rates on student loans, meaning borrowers struggle more to repay.

The difference between subsidized and unsubsidized federal loans

A subsidized federal loan means the government pays the interest while you are in school at least half-time. You owe only the amount you borrowed when you graduate. Subsidized loans are available only to undergraduate students who demonstrate financial need.

An unsubsidized federal loan means interest accrues from the moment the loan is disbursed. You can choose to pay the interest while in school, or let it accrue and capitalize (add to your principal) at graduation. If you let it capitalize, you will owe more than you borrowed. For example, if you borrow $7,500 in unsubsidized loans at 6.53% interest and let interest accrue for four years, you will owe approximately $9,700 at graduation instead of $7,500.

Unsubsidized loans are available to both undergraduate and graduate students regardless of financial need. Many students use both types: they borrow the maximum subsidized amount first, then borrow unsubsidized loans for any remaining cost.

Private student loans and how they differ from federal loans

Private student loans are issued by banks, credit unions, and online lenders, not by the federal government. There is no annual borrowing limit set by law. Instead, each lender sets a limit based on the school's cost of attendance minus any other aid you have received. This means you could theoretically borrow $60,000 or more per year if you attend an expensive school and have no other aid.

Private loan interest rates depend on your credit score and the lender's policies. Rates can be fixed (the same for the life of the loan) or variable (changing with market conditions). As of recent years, private loan rates have ranged from around 4% to 14%, though rates change frequently. If you have no credit history, a lender may require a cosigner (usually a parent) to approve the loan.

Interest on private loans typically accrues while you are in school, meaning you owe more at graduation than you borrowed. Some private lenders offer in-school interest payment plans or allow interest to be deferred, but you still owe it eventually.

What you actually owe at graduation

Your total debt at graduation is the sum of all loans you took out plus any accrued interest. If you borrowed $7,500 per year in subsidized federal loans for four years, you owe $30,000. If you also borrowed $5,000 per year in unsubsidized federal loans and let interest accrue, you owe approximately $21,000 instead of $20,000 in unsubsidized loans alone, for a total of around $51,000.

If you also took private loans, add those amounts plus their accrued interest. A student who borrowed $30,000 in federal loans and $20,000 in private loans at 7% interest over four years might owe approximately $56,000 in federal loans and $27,000 in private loans at graduation, for a total of $83,000.

The median federal student loan debt for borrowers who graduated in recent years was around $28,000 to $30,000, but this varies by school type and field of study. Graduate degree holders often owe significantly more because graduate programs cost more and allow higher borrowing limits.

Parent PLUS loans and how they affect family debt

Parent PLUS loans are federal loans that parents can take out to pay for their child's education. There is no annual limit on Parent PLUS loans — parents can borrow up to the full cost of attendance minus any other aid the student received. Interest rates on Parent PLUS loans are fixed by Congress and are typically higher than rates on student loans. As of recent years, Parent PLUS rates have been around 8% to 9%.

Parent PLUS loans accrue interest while the student is in school. Parents can choose to pay interest while the student is enrolled, or let it accrue and capitalize at graduation. If a parent borrows $15,000 per year for four years at 8.5% interest and lets it accrue, they will owe approximately $70,000 at graduation instead of $60,000.

Parent PLUS loans are the parent's legal responsibility, not the student's. However, they add to the family's total debt burden. Some families use Parent PLUS loans as a last resort when federal student loans and private loans are exhausted.

Frequently Asked Questions

Can I borrow more than the federal limit if I need to?

Yes. Once you have borrowed the maximum federal loan amount, you can take out private student loans for any remaining cost. Private lenders have no federal cap and will lend up to the school's cost of attendance minus other aid. However, private loans typically have higher interest rates and fewer protections than federal loans.

Does interest accrue on all student loans while I'm in school?

No. Interest on subsidized federal loans does not accrue while you are enrolled at least half-time. Interest on unsubsidized federal loans and private loans accrues immediately, though you may be able to defer payment. If you defer payment, the interest capitalizes and you owe more at graduation.

What happens if I don't finish my degree?

You still owe the full amount you borrowed, even if you drop out. Repayment typically begins six months after you leave school (the grace period). If you return to school at least half-time, the grace period pauses, but it resumes when you leave again.

How much will my monthly payment be after graduation?

Monthly payments depend on your total debt, interest rate, and repayment plan. On the standard 10-year repayment plan, a borrower with $30,000 in federal loans at 6% interest would pay approximately $333 per month. A borrower with $60,000 would pay approximately $666 per month. Income-driven repayment plans can lower monthly payments but extend the repayment period.

Are there loan forgiveness programs that reduce what I owe?

Federal loan forgiveness programs exist for certain professions (teachers, public service workers, healthcare workers in underserved areas) and for borrowers with very low incomes. Public Service Loan Forgiveness forgives remaining federal loan debt after 120 may have access to payments while working for a government or nonprofit employer. Income-Contingent Repayment forgives remaining debt after 25 years of payments. Private loans have no forgiveness programs.