How Much Can You Take Out in Private Student Loans?

When you reach the federal student loan limit, you might need to rely on private student loans for any additional funding needs.

The amount you can borrow varies by lender, but private student loan limits are often based on a total loan amount ranging from $75,000 to $120,000 for undergraduate students and $150,000 to $300,000 for graduate or professional students. Read on for more about private student loan limits and our advice to calculate the right amount to borrow.

What are the limits on private student loans?

Limits for private student loans are different from those for federal loans. Private lenders use factors such as your income, credit score, current major, future projected income, and whether you have a cosigner to determine how much to lend you.

Most private lenders have annual and aggregate loan limits. Here are several lenders’ maximum annual limits:

Lender	Limits
College Ave	$1,000 – 100% of certified costs
Sallie Mae	$1,000 – 100% of certified costs
Earnest	$1,000 – 100% of certified costs
Ascent	$2,001 – $200,000

Lenders’ maximum aggregate limits often range from $75,000 to $120,000 for undergraduate students and $150,000 to $300,000 for graduate or professional students.

The aggregate limits consider how much you’ve already taken out in federal and private student loans. Students who have already borrowed money for school tend to be eligible for less than those who haven’t yet borrowed.

How much should I take out in private student loans?

The amount you can borrow might be much higher than the amount you should borrow. Your school’s annual cost of attendance may be more than you can afford to repay.

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Tip

One rule of thumb is not to borrow more than you’ll earn in your first year out of college. If you exceed that amount, you may find it difficult to repay your student loans on top of other bills.

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You can use Payscale or the official Bureau of Labor Statistics wage data site to find the average starting salary for your profession. The website CollegeSimply reports data on starting salaries the colleges themselves report to the U.S. Department of Education. Search for your school, and look at the starting salaries.

If you know where you want to work after graduation, you can look up salary information for that region. The more specific you are, the less likely you are to borrow more than you can easily afford.

You should also consider whether you will attend graduate or professional school after earning an undergraduate degree. If so, you should factor in those costs when deciding how much to borrow for your bachelor’s degree.

Keep in mind that private student loans offer fewer options for struggling borrowers than federal loans—for example, you’re not likely to qualify for income-driven repayment plans or loan forgiveness options for private student loans.

Calculate how much you can afford in student loans

Before taking out a private student loan, you should determine both how much you might need to borrow and whether you can afford to pay the loan back.

To find out how much you might need to borrow, calculate the following:

1. How much you need to live on for the semester. This should include the cost of tuition, books, fees, and supplies.
2. How much your room and board, rent, utilities, internet, and cellphone will cost for the semester.
3. How much you expect to spend on variable expenses, such as groceries, gas, clothes, and entertainment that semester.
4. Add up the amounts above, then subtract any grant aid, contributions from savings or earnings you can apply to this semester’s education costs.
5. Next, subtract any federal loans, tax credits such as the American Opportunity or Lifetime Learning credit.

This should give you an estimate of the amount you’ll need to borrow for the semester.

Calculate your loan repayment

To determine whether you can afford to pay the loan back, create a proposed budget using your expected postgraduation starting monthly salary.

Subtract the following expected monthly amounts:

• Taxes
• Healthcare
• Rent
• Food
• Transportation
• Insurance
• Travel
• Entertainment

See whether you expect to make your loan payments comfortably. You can also use other important ratios that determine financial health. For example, the long-term debt coverage ratio is:

Annual gross income / Annual debt payments

This ratio should be over 2.5. If it’s lower, you might have trouble repaying your loans.

You should only use your student loans to cover necessary expenses—not spring break trips or concert tickets. You’ll need to repay every dollar you borrow with interest, so try to make sure you aren’t spending frivolously.

How to lower the amount you need in student loans

Take advantage of scholarships and grants to minimize your private student loan burden. Ask your college advisor about any awards you may be eligible for, and look online for scholarships that fit your major and interests.

A part-time job can also help you cover expenses and minimize the need for loans. Try to find a gig that comes with extra cost-of-living benefits, such as waiting tables at a restaurant with free shift meals or working as an RA for free or reduced housing.