How Much Can I Borrow for College?
"The cost of attending college continues to rise, and for many students, paying for their education requires borrowing. A variety of federal student loans are available through the U.S. Department of Education, while private loans are offered by banks and other lenders. Each loan comes with a different set of parameters and qualifications that dictate whether and how much students can borrow," U.S. News & World Report writes.
..."Regardless of the type or number of loans a student takes out, the maximum annual loan amount is capped at the cost of attendance, or COA, at the student's college or university. For two-year and four-year universities, the COA includes the total cost of tuition, fees and related expenses like on-campus room and board for both the fall and spring semesters of one school year. These are known as "direct costs" and can typically be found on the school's website.
It can also include 'indirect costs' and estimates of other expenses that students will likely incur but aren’t paying directly to the school, like textbooks and off-campus living and transportation, says Karen McCarthy, vice president of public policy and federal relations for the National Association of Student Financial Aid Administrators."
..."At schools where COA is particularly high, it's possible that students will take out private loans to cover what federal loans and other financial aid don't, McCarthy says. Some colleges try to avoid loans altogether, instead meeting full financial need by replacing federal loans with scholarships, grants and work-study opportunities, which may help students graduate debt free.
While students can't borrow more than the cost of attendance, they might not always need to borrow the maximum amount allotted, she says. The COA typically includes average expenses for indirect costs, and financially conscious students might be able to get by with spending less than the average. The less you borrow, the less you'll have to repay.
'We always encourage people to take a look at some of those indirect expenses so that you’re not simply accepting the maximum amount, and then you may be borrowing more than you actually need,' she says."
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Publication Date: 2/14/2023
