How to Determine How Much You Can Borrow on a Student Loan

by Contributor

There are numerous factors that play into how much you can borrow on a student loan. These factors include what kind of loan you get, your status as a dependent and what level of college you are entering. These steps will help you figure out just how much you can borrow on a student loan.

Research the type of student loan for which you are applying. Private loans will have specific rates and terms based on the financial institution and your credit history. Federal student loans are available to students based on financial need. Stafford loans are available to all students, while Perkins loans are available to low-income students.

Know that federal loans have a capped amount that each student can borrow. The cap for a Perkins loan is $4000 per year and $20,000 for your entire undergraduate education. The cap for a Stafford loan fluctuates depending on what year you are in school. A first year student can borrow up to $2,625 in Stafford loans, and that borrowing power increases for every year of college completed. By the student's senior year, they can borrow $5,500 in subsidized loans. The total amount you can borrow for a Stafford loan if you are independent is $46,000 and $23,000 if you are a dependent.

If you are a dependent--meaning you are under 24, not married and have no children of your own--you can borrow less money than if you were independent. Dependent students can usually only borrow the equivalent to the cap on subsidized loans. An independent student can borrow up to the full amount of the cap on subsidized loans and still get a few unsubsidized loans.

The amount of money also depends on your family's expected contribution to your education. This is the amount of money your parents are supposed to kick in to help you through college. This is determined when your parents fill out their FAFSA form each year.