Subsidized loans from the federal government are only available to those who demonstrate financial need and are pursuing an undergraduate degree. While subsidized loans ultimately cost the borrower less because of the covered interest payments, unsubsidized loans have fewer restrictions on how much you can borrow.
The maximum amount you can borrow each academic year in Direct Unsubsidized Loans ranges from $5,500 to $12,500 for undergraduates, depending on your year in school and your dependency status. Direct Unsubsidized Loans have an annual limit of $20,500 for graduate or professional students.
Ultimately, it's best to use subsidized student loans if you qualify, as you will pay less over time than with unsubsidized loans.
Understanding Federal Student Loan Types
The maximum amount that undergraduate students can borrow each year in federal direct subsidized and unsubsidized loans ranges from $5,500 to $12,500 per year, depending on their year in school and whether they're a dependent or independent student.
If those monthly payments look low compared to what most borrowers pay, it's because most borrowers carry a lot more than $20,000 in student loan debt. As of March 2023, the average federal student loan debt in the United States was about $37,720, according to a BestColleges analysis of Education Department data.
Which Student Loans Should You Pay First: Subsidized or Unsubsidized? It's a good idea to start paying back unsubsidized student loans first, since you're more likely to have a higher balance that accrues interest much faster.
Subsidized loans are typically better than unsubsidized ones since you save more money on interest charges. However, not all borrowers are eligible for subsidized loans since you need to demonstrate financial need.
Unsubsidized loans have higher borrowing limits than subsidized loans. However, schools still set annual and total limits on borrowing based on federal government rules. Interest on unsubsidized student loans begins accruing as soon as the loan is disbursed, and you're responsible for paying it.
Subsidized and Unsubsidized Aggregate Loan Limit
$138,500 for graduate or professional students - no more than $65,000 of this amount may be in subsidized loans (the graduate aggregate limit includes all federal loans received for undergraduate study).
Subsidized loans don't generally start accruing (accumulating) interest until you leave school (or drop below half-time enrollment), so accept a subsidized loan before an unsubsidized loan. Next, accept an unsubsidized loan before a PLUS loan. Use Loan Simulator to calculate your federal student loan payments.
Direct Unsubsidized Loan Fees
Fees are deducted from each loan disbursement. You can ask the college financial aid office to increase the loan amount to cover the fees, up to the annual loan limit.
Request Additional Federal Student Loans
If you've exhausted other options and still need additional funds to help you pay for school, contact your school's financial aid office to find out if you're eligible for additional federal student loans.
Stafford Loan Limits
For example, a first-year dependent student can take out a total of $5,500 in Stafford loans. Subsidized loans can make up a maximum of $3,500 of this total. This means if you have the maximum $3,500 in a subsidized loan, you can borrow another $2,000 in an unsubsidized loan that year.
Do student loans go away after 7 years? While negative information about your student loans may disappear from your credit reports after seven years, the student loans will remain on your credit reports — and in your life — until you pay them off.
The good news is that student loan payments don't have to go on forever. If you have federal student loans and are making payments under an income-driven repayment (IDR) plan, you may be able to have your loans forgiven after 20 years.
Because of this, it may be smart to pay off your private student loans first. If you have federal student loans, they may be either subsidized or unsubsidized loans. It's typically best to focus on your unsubsidized loans first since they accrue interest during school and your grace period.
Undergraduate third year, fourth year, and remaining years: Dependent students can take out $7,500 ($3,750 per semester), of which $5,500 ($2,750 per semester) can be subsidized loans. Independent undergraduates can take out $12,500 ($6,250 per semester), with $5,500 of that being subsidized loans.
Generally, the 150% limit calculates a student's eligibility based on the period of time for which a student is receiving a Direct Subsidized Loan, not the amount of that loan.
Aggregate Loan Limits
Dependent students: $31,000. Independent undergraduates and dependent students whose parents are unable to obtain PLUS Loans: $57,500. Graduate and professional students: $138,500 (or $224,000 for certain medical training) including undergraduate borrowing.
Federal Pell Grant
The maximum Pell Grant for the 2023-24 award year is $7,395. The maximum Pell Grant per term is $3,698 for Fall/$3697 for Spring. The Expected Family Contribution (EFC) range for 2023-24 Pell Grant eligibility is 0 – 6,656.
How can I increase the amounts of federal loans I have borrowed to cover additional expenses? If you need to increase your loan eligibility to cover additional expenses, submit an online request and supporting documentation through FAST.