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If your parents are high earners, you might assume you won’t get any financial aid to help pay for college. But that’s not necessarily the case. The Department of Education doesn’t have an official income cutoff to qualify for federal financial aid. So, even if you think your parents’ income is too high, it’s still worth applying (it’s also free to do so).

Read on to learn how to get financial aid for college when you think your parents make too much money, as well as how to pay for college costs if you don’t qualify for financial aid.

It All Starts With the FAFSA®

The first step to knowing whether or not you qualify for any financial aid is to fill out the Free Application for Federal Student Aid (FAFSA®). Even if you think your parents make too much to qualify for financial aid, it’s a smart idea to fill out and submit this form.

For one reason, there’s no income cutoff for federal student aid, so you may be surprised by what you are able to qualify for. For another, the FAFSA gives you access to non-need-based aid, such as Direct Unsubsidized Loans and institutional merit aid.

Who Determines Aid Amount and Type?

The financial aid office at your chosen college or career school will determine how much financial aid you are eligible to receive. Here’s a look at what goes into the decision.

1. The first factor considered is the cost of attendance (COA), or what it costs a typical student to attend a particular college or university for one academic year. Cost of attendance includes tuition and fees, as well as books, lodging, food, transportation, loan fees, and eligible study-abroad programs.

2. Then the school considers your Student Aid Index, or SAI (formerly called Expected Family Contribution, or EFC). Your SAI is an eligibility index number that results from the information that you provide in your FAFSA.

3. To determine how much need-based aid you can get, the school will subtract your SAI from the COA. Need-based aid includes Pell Grants, Direct Subsidized Loans, and Federal Work-Study.

4. To determine how much non-need-based aid you qualify for, the school takes the COA and subtracts any financial aid you’ve already been awarded. Federal non-need-based aid includes Direct Unsubsidized Loans, Direct PLUS Loans, and TEACH Grants.

One big difference between subsidized and unsubsidized loans is when interest accrual starts. Because subsidized loans are need-based, the government covers any interest that accrues until loan repayment starts (typically six months after graduation). With unsubsidized loans, the interest starts to accrue from day one (though you don’t need to start making loan payments until six months after graduation).

You can estimate your eligibility for federal student aid by using either the Federal Student Aid Estimator or your school’s net price calculator (which you can find using the Department of Education’s search tool).

What Are Rules on Dependency, Divorce?

A student’s dependency status can make a big difference on their SAI. To be considered independent for federal financial aid, a student must be at least 24 years of age, married, on active duty in the U.S. Armed Forces, financially supporting dependent children, an orphan (both parents deceased), a ward of the court, or an emancipated minor.

The rules regarding financial aid and divorce changed for the 2024-25 school year. The new FAFSA rules require the parent who provided the most financial support in the “prior-prior” tax year to complete the FAFSA application instead of the custodial parent. Prior-prior refers to the tax year two years ago from the beginning of the college semester. For the 2025–26 award year, FAFSA would be looking at the 2023 tax year for this determination.

Other Routes to Meeting All Needs

The government isn’t the only path to pay for college. Here are several other options you may want to consider.

Scholarships

The best thing about scholarships? You don’t need to pay them back. The second best thing is that they’re most often based on merit, not need.

So even if your parents make a good living, you may still be eligible. While many are awarded solely on academics, others are given for athletic talent, specific interests, or being a member of a specific group.

There are numerous college scholarships out there, offered by schools, employers, individuals, private companies, nonprofits, communities, religious groups, and professional and social organizations. To suss out scholarship opportunities you might be eligible for, talk to your high school guidance counselor, your college’s financial aid office, and/or check out one of the many online scholarships search tools.

An Appeal of Your SAI

If your financial aid offer is less than you need to be able to afford college, you are within your rights to appeal to the school’s financial aid director.

You might want to be prepared to back up your request with detailed information such as your SAI, the amount you’ll need to successfully attend school, or a change in circumstances that will affect your family’s actual ability to pay, such as a parent’s job loss.

Recommended: How to Write a Financial Aid Appeal Letter

Parent Loans

Parents can apply for a Parent Plus Loan through the Department of Education. These loans are available to parents regardless of income, provided they do not have an adverse credit history. For loans disbursed on or after July 1, 2025, and before July 1, 2026, the interest rate is 8.94%. This is a fixed interest rate for the life of the loan. There is also an origination fee of 4.228%, which is deducted from each loan disbursement.

Some private lenders also offer parent student loans. You can apply for a private parent student loan directly with the lender. Before signing up for a private parent loan, it’s a good idea to shop around to find the lowest student loan interest rate you qualify for. Some lenders have a pre-qualification process that allows you to see a personalized rate before the lender does a hard credit pull.

Both federal and private parent loans can be used to cover any gaps left over after scholarships, grants, and other financial aid have been applied, up to the full cost of attendance.

Private Student Loans

Private student loans are also available to students to help them cover the costs of higher education, and they could be a good Plan B if there’s a gap between the aid you received (including federal student loans) and the cost of attendance.

Private student loans don’t have federal benefits like income-driven repayment plans and forgiveness programs, and interest rates are typically higher than undergraduate federal student loans. However, unlike federal student loans, you can apply for them at any time of the year. Plus, you can typically borrow up the full cost of attendance, which gives you more borrowing power than you get with federal student loans.

Private student loans can have either a fixed or variable interest rate, and rates are determined by the lender. Qualifying for a private student loan is based on the borrower’s creditworthiness rather than need.

Recommended: A Complete Guide to Private Student Loans

The Takeaway

If your parents make too much money to qualify for financial aid, you may have to shift course a little bit, but there are other ways to get help paying for all of the expenses of college. These include merit-based scholarships, non-need-based federal student loans, and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Will I get financial aid if my parents make over $100,000?

Financial aid eligibility isn’t solely based on parental income. While a higher income can affect need-based aid, you may still qualify for merit-based scholarships, grants, or other forms of assistance. Completing the FAFSA and exploring options from your school and external sources can help you find available aid.

What salary is too high for financial aid?

There’s no fixed salary threshold for financial aid, but higher incomes can reduce eligibility for need-based assistance. The FAFSA considers various factors, including family size, assets, and expenses. Even with a high income, you might still qualify for some aid or merit-based scholarships. Always apply to explore your options.

At what point does FAFSA stop using parents’ income?

FAFSA typically stops using parents’ income when you are considered an independent student, which can happen if you are 24 years old, married, a graduate student, have dependents, are a veteran, or meet other specific criteria. Always check the latest FAFSA guidelines for the most accurate information.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q325-033

Student loans — federal or private — begin accruing interest when they’re disbursed, with the exception of Federal Direct Subsidized Loans.

Understanding when student loans start accruing interest is essential for managing college costs and planning your financial future. Interest can begin accumulating at different times depending on the type of loan — federal or private, subsidized or unsubsidized — which can significantly impact the total amount you repay over time.

Knowing the rules around interest accrual can help you make smart decisions about borrowing, repayment, and even early payments while still in school. Keep reading when and how student loan interest starts to add up so you can stay informed and avoid unwanted surprises.

Interest Accrual Basics and Exceptions

As a general rule, interest begins accruing on a student loan as soon as it’s disbursed. While the repayment of the loan is usually subject to a grace period (detailed later in this article), the interest continues to accrue even while the payments are paused.

The one exception is when certain loans are in deferment. Interest usually does not accrue on the following types of loans while they are in deferment:

•   Direct Subsidized Loans

•   Perkins Loans

•   The subsidized portion of Direct Consolidation Loans

•   The subsidized portion of Federal Family Education Loan Consolidation Loans

What Triggers Interest Accrual on Federal Loans?

Student loan interest on most federal student loans begins to accrue as soon as the loan is disbursed, which is typically when the funds are sent to your school. This means that even while you are still in school, interest is accumulating on your loans, though you may not have to make payments until after you graduate or drop below half-time enrollment.

For federal subsidized loans, interest is triggered when a borrower enters repayment, typically after the end of the grace period following graduation, leaving school, or dropping below half-time enrollment.

Interest-Free Periods and Deferments

Certain federal student loans, such as Direct Subsidized Loans mentioned above, offer interest-free periods during specific times in a borrower’s academic and post-academic journey. While enrolled in school at least half-time, during the six-month grace period after leaving school, and during qualifying deferments, the federal government pays the interest on subsidized loans.

Student loan deferment allows borrowers to temporarily postpone loan payments due to qualifying circumstances such as returning to school, unemployment, economic hardship, or active military duty. For subsidized federal loans, deferment can also pause interest accrual, which provides financial relief without increasing the loan balance.

The Basics of Student Loan Interest

A student who takes out a student loan (or a parent who takes out a parent-student loan in their own name) signs a promissory note outlining all the terms of the loan, including the loan amount, interest rate, disbursement date, and payment schedule.

Federal student loans issued after July 1, 2006, have a fixed rate. The repayment default is the standard 10-year plan, but there are options, such as income-based repayment or a Direct Consolidation Loan, that can draw out repayment to double that or more.

Private student loans are not eligible for federal income-driven repayment plans. Interest rates on private student loans may be fixed or variable, and are based on your — or your cosigner’s — financial history. The repayment term can be anywhere from five to 20 years.

Recommended: How Do Student Loans Work?

Interest and Grace Periods by Loan

Capitalized interest on student loans can significantly increase how much a borrower owes. This is when a lender adds unpaid interest to your principal loan balance and then charges interest on your larger balance.

The Department of Education implemented new regulations in July 2023 eliminating all instances of interest capitalization that are not specified in the Higher Education Act of 1965 (HEA). That means federal student loan interest capitalization on subsidized loans no longer occurs when a borrower first enters repayment status following the grace period.

A federal student loan borrower who exits a period of deferment on an unsubsidized loan or who overcomes a partial financial hardship on an income-based repayment plan may face capitalized interest charges. Federal student loan interest capitalization can also occur upon loan consolidation. These are the few instances where federal law requires interest capitalization.

Fixed interest rates on newly disbursed federal student loans are determined by formulas specified in the HEA. These are the rates and loan fees (deducted from each disbursement) for the 2025–26 school year:

•   6.39% for Direct Subsidized or Unsubsidized Loans for undergraduates

•   7.94% for Direct Unsubsidized Loans for graduate and professional students

•  8.94% for Direct PLUS Loans for graduate students, professional students, and parents

Recommended: Types of Federal Student Loans

Unsubsidized Student Loans

Federal Direct Unsubsidized Loans are available to undergraduate and graduate students with no regard to financial need.

Loan fee: 1.057%

Grace period: While you’re in school at least half-time and for six months after graduation.

Subsidized Student Loans

Federal Direct Subsidized Loans
are available to undergraduates who demonstrate financial need.

Loan fee: 1.057%

Grace period: While you’re in school at least half-time and for six months after you leave school. The government pays the interest during those grace periods and during any deferment.

Direct PLUS Loans

Taken Out by a Parent

A Parent PLUS Loan acquired to help a dependent undergraduate is unsubsidized.

Loan fee: 4.228%

Some private lenders refinance Parent PLUS loans at what could be a lower rate.

Grace period: First payment is due within 60 days of final disbursement, but a parent can apply to defer payments while their child is in school at least half-time and for six months after.

Taken Out by a Graduate Student or Professional Student

Grad PLUS Loans are available to students through schools participating in the Direct Loan Program.

Loan fee: 4.228%

Grace period: Automatic deferment while in school and for six months after graduating or dropping below half-time enrollment.

Private Student Loans

Some banks, credit unions, state agencies, and online lenders offer private student loans.

Rate and fee: Rates can be fixed or variable, and rates and fees vary by lender

Grace period: Student loan interest accrual begins when a private student loan is disbursed, but payments may be deferred while a borrower is in school.

Recommended: Private Graduate Student Loans

How Is Interest on Student Loans Calculated?

Student loans typically generate interest every day. Your annual percentage rate (APR) is divided by 365 days to determine a daily interest rate, and you are then charged interest each day on the total amount you owe.

That interest is added to your total balance, and you’re then charged interest on the new balance — paying interest on interest until the loans are paid off.

If you don’t know what your monthly payments will be, a student loan payment calculator can help. This one estimates how much you’ll be paying each month so you can better prepare for your upcoming bills.

The amount you pay each month will be the same, but the money first goes toward paying off interest and any fees you’ve been charged (like late fees); the remainder goes to pay down the principal of the loan.

As you pay down your loan, because the principal is decreasing, the amount of interest you’re accruing decreases. And so, over the life of your loan, less of your monthly payment will go toward interest and more will go toward the principal. This is known as student loan amortization.

Fixed vs. Variable Interest Rates

Federal student loans have fixed interest rates, but private student loans can have fixed or variable rates. A fixed interest rate remains the same throughout the life of the loan, providing predictability and stability in your monthly payments. This can be advantageous if you prefer a consistent budget and want to avoid the risk of interest rate fluctuations.

On the other hand, a variable interest rate can change over time, typically in response to market conditions. While this can result in lower payments if rates decrease, it also carries the risk of higher payments if rates rise. Understanding the pros and cons of each can help you make an informed decision that aligns with your financial goals and risk tolerance.

Capitalization of Interest

Capitalization of interest on private student loans occurs when unpaid interest is added to the loan’s principal balance, typically after periods of deferment, forbearance, or when a borrower begins repayment. This means future interest is calculated on a higher principal amount, which can significantly increase the total cost of the loan over time.

Unlike federal loans, where capitalization rules are clearly defined and sometimes limited, private lenders set their own policies — often capitalizing interest more frequently or under broader circumstances.

How You Could Save on Interest

Because interest can add up so quickly, it’s important to pay attention to the interest rates you’re paying on your student loans.

Student loan refinancing — taking out a brand-new loan that pays off your current loans — can lower the amount of interest your loans accrue if you qualify for a lower interest rate or a shorter term.

Even a small difference in interest rates could help you save a substantial amount of money paid in total interest over the life of the loan, depending on the term you select. To see how refinancing might save you money, take a look at this student loan refinance calculator.

It’s important to know, though, that refinancing federal student loans will make them ineligible for federal benefits like income-driven repayment plans and Public Service Loan Forgiveness.

Making Payments During School or Grace Period

Making student loan payments while still in school or during the grace period can significantly reduce the total cost of borrowing. Even small payments toward the interest on unsubsidized or undergraduate private loans can prevent that interest from capitalizing when repayment begins.

This helps keep the loan amount from growing and reduces the interest you’ll pay over the life of the loan. Starting payments early also builds good financial habits, minimizes future debt stress, and may shorten the overall repayment timeline.

The Takeaway

When does student loan interest start accruing? The minute the loan is disbursed, except on Federal Direct Subsidized Loans. It’s important for borrowers to understand and pay attention to when the interest starts accruing, as that interest can be capitalized and increase the total cost of the loan.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

When do unsubsidized student loans start accruing interest?

Unsubsidized student loans start accruing interest as soon as the loan is disbursed. This means interest begins to accumulate from the moment the funds are sent to your school, even while you are still in college. You can choose to pay the interest while in school or defer it.

Do subsidized loans ever accrue interest?

Subsidized loans do not accrue interest while you are in school at least half-time, during the grace period after graduation, or during deferment periods. However, interest begins to accrue once you enter repayment, typically six months after graduation.

How does interest capitalization affect loan balance?

Interest capitalization adds unpaid interest to the principal balance of your loan, increasing the total amount you owe. This can lead to higher monthly payments and more interest accruing over time, making the loan more expensive in the long run.

Can you avoid student loan interest completely?

Avoiding student loan interest completely is challenging but possible. Opt for grants, scholarships, or work-study programs. If you take out loans, pay the interest while in school or during grace periods to prevent capitalization. Choose loans with lower interest rates and pay them off quickly.

Does refinancing stop interest accrual?

Refinancing doesn’t stop interest accrual; it replaces your existing loans with a new one, often with a different interest rate. The new loan will continue to accrue interest, but the rate and terms may be more favorable, potentially reducing the overall interest paid.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q325-021

When taking out student loans, it’s important to know that both federal and private student loans have borrowing caps. Federal loans have two different limits: annual and lifetime borrowing limits.

The lifetime aggregate federal student loan limit for dependent undergraduate students is $31,000, and no more than $23,000 can be in subsidized loans. For graduate students, the lifetime borrowing limit is $138,500, of which no more than $65,500 can be in subsidized loans.

Private lenders may also have lifetime and annual borrowing limits, though those limits are set by the lender.

It’s possible to hit the maximum amount of loans allowed before finishing school, so it’s helpful to understand how much you may be eligible to borrow.

What Is the Lifetime Limit for Student Loans?

Students have the option to borrow both federal and private student loans. There are annual and lifetime limits for borrowing.

Federal Student Loan Lifetime Limits

Federal student loans have annual and lifetime limits. The limits can vary by student, depending on three criteria:

•   Year in school

•   Type of loan you are eligible to borrow choose (subsidized vs. unsubsidized)

•   Dependency status

Independent students, who the U.S. Department of Education considers to be on their own financially, can borrow more than dependent students who can typically get help from their parents.

Even if you’re financially independent of your parents, the definition of an independent student is fairly strict, and if you are under the age of 24, you’ll need to confirm you qualify as an independent student. If you’re not sure if you’re a dependent or independent student, see your guidance counselor or an admissions counselor who may be able to help.

Here are the federal loan limits, depending on your status and year in school, according to the U.S. Department of Education:

^*Except students whose parents are unable to obtain PLUS Loans.

^**Also includes dependent undergraduate students whose parents are unable to obtain PLUS Loans.

Note that the lifetime limit for graduate and professional students includes the amount in federal loans borrowed during a student’s undergraduate studies.

Private Student Loan Lifetime Limits

If you choose to borrow private student loans, the annual and lifetime limit may vary by lender. That said, the annual limits typically cannot exceed the cost of attendance at your school, less any financial aid you have already received.

The total cost of attendance is a number determined by your school and typically includes tuition and fees, on-campus room and board, books, supplies, and transportation.

As for lifetime limits, it may depend on whether you’re an undergraduate student or a graduate student. Some private lenders may offer higher limits if you’re doing an MBA or going to law or medical school, for example.

Some lenders have just one limit for all loans. But in some cases, you may even see two lifetime limits: one for loans through the private lender and one for total federal and private loans.

If you’re considering borrowing from a private lender, ask about their loan limits before applying to make sure you get the funding you need.

How Loan Limits Vary by Degree Level

Student loan limits can vary significantly depending on the degree level you are pursuing:

•  Undergraduate degrees: Undergraduate student loans include Federal Direct Subsidized and Unsubsidized Loans. They have annual limits ranging from $5,500 to $12,500, and aggregate limits of $31,000 to $57,500, depending on your year in school and dependency status.

•  Graduate degrees: Graduate student loans include Federal Direct Unsubsidized Loans and have higher annual limits, typically up to $20,500, with an aggregate limit of $138,500, including any undergraduate debt.

•  Professional degrees (e.g., law, medical): Federal Direct Unsubsidized Loans for professional students have an annual limit of $40,500 and an aggregate limit of $224,000, including any undergraduate debt.

•  Parent PLUS Loans: Parents can borrow up to the cost of attendance minus other financial aid received, with no set annual or aggregate limits.

•  Private student loans: Private lenders set their own limits, which can vary widely but are often based on the cost of attendance and the borrower’s creditworthiness.

Aggregate Loan Limits vs. Annual Limits

When borrowing federal student loans, it’s important to understand the difference between annual limits and aggregate (lifetime) limits.

Annual limits refer to the maximum amount a student can borrow in a single academic year. These limits vary by year in school and dependency status — for example, dependent undergraduate students can typically borrow between $5,500 and $7,500 per year, while independent undergrads may be eligible for up to $12,500 annually.

Aggregate loan limits, on the other hand, represent the total amount a student can borrow over the course of their education. For dependent undergraduate students, the aggregate cap is $31,000, while independent undergraduates can borrow up to $57,500. Graduate and professional students have a higher lifetime limit of $138,500 (which includes any undergraduate loans already borrowed). Once you reach the aggregate limit, you must repay some of your balance before becoming eligible for additional federal loans.

Recommended: How Do Student Loans Work?

What to Do If You’ve Hit the Maximum Federal Student Loan Amount

If you’ve reached your lifetime limit for federal student loans or you’re close to it, it’s probably time to start thinking about how you’re going to repay your student loans. Here are some options if you’ve maxed out your options for federal loans.

Consider Student Loan Refinancing

One way to make progress toward paying off your student loans and potentially save money along the way is to refinance them with a private lender. With student loan refinancing, you replace your current loans with a new one.

In some cases, you may qualify for a lower interest rate than what you’re currently paying. You could also adjust your repayment schedule to pay off your student loans faster or take some more time to fit your budget better.

With a lower interest rate, you could reduce the amount of money you spend on interest over the life of the loan. If you lengthen the term of your loan, you’d decrease your monthly payments but pay more in interest over the life of the loan.

In other words, if you refinance your student loans, you may get more flexibility with your payments as you eliminate your debt. However, it is important to note that if you refinance your federal student loans with a private lender, you forfeit eligibility for federal benefits, such as student loan forgiveness and deferment.

Recommended: Student Loan Consolidation Rates

Check Out Federal Assistance Programs

If you’ve maxed out your federal student loans because your income isn’t where you’d like it to be, you may want to take a look at federal programs like income-driven repayment plans, which base your monthly payments on your discretionary income and family size.

If you’re facing financial difficulties, you might want to consider deferment or forbearance instead, which allow you to temporarily pause your payments for a certain amount of time. However, the two programs have some important differences between them.

For example, with deferment, a borrower doesn’t need to make payments on the interest that accrues on certain loans, including Direct Subsidized Loans. With forbearance, borrowers must pay the interest that accrues no matter what type of federal loan they have.

Consider a Private Student Loan

If you’ve reached your limit on federal student loans but still need some assistance paying for your tuition, you might consider taking out a private student loan. There are options for fixed or variable rate private student loans, and some lenders like SoFi offer flexible repayment options.

Explore Employer Tuition Assistance or Loan Repayment Programs

Another effective strategy if you’ve reached your student loan limit is to explore employer tuition assistance or loan repayment programs. Many employers offer financial support to help employees further their education, either by covering tuition costs directly or by providing funds to repay existing student loans.

These benefits can significantly reduce your financial burden and help you continue your education without incurring additional debt. Additionally, some companies may offer flexible payment options or matching contributions, making it easier to manage your educational expenses.

Return to School for Eligibility Reset

If you’ve reached your federal loan aggregate limit, returning to school does not reset your borrowing eligibility — you’re still bound by both annual and aggregate limits regardless of breaks or changing institutions.

However, if you are considering furthering your education, returning to school can allow you access to new loan limits. For example, if you have maxed out your undergraduate loan limits, enrolling in a master’s or doctoral program can provide you with new annual and aggregate loan limits specific to graduate studies.

Recommended: Applying for Grad School: Tips for Success

The Takeaway

There are both annual and lifetime borrowing limits for federal student loans. The lifetime limit for dependent undergraduate students is $31,000, of which no more than $23,000 can be in subsidized loans. For independent undergraduate students, the lifetime limit is $57,550, of which no more than $23,000 can be in subsidized loans.

Private lenders may also have borrowing limits, but they are set by the lender. Generally speaking, private student loans are limited to the cost of attendance.

If you’ve reached your lifetime limit on student loans and you’re ready to start repaying them — and hoping to save some money in the process — options to consider include student loan refinancing and, for federal loans, income-driven repayment plans.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What is the maximum student loan limit?

The maximum lifetime aggregate federal student loan limit for dependent undergraduates is $31,000, and no more than $23,000 of that can be in subsidized loans. For financially independent undergraduate students, the maximum lifetime aggregate limit is $57,500, of which no more than $23,000 can be in subsidized loans.
For graduate students, the lifetime aggregate loan limit is $138,500, of which no more than $65,500 can be in subsidized loans. With private student loans, lenders typically set their own lifetime limits.

What is the maximum student loan you can take out per year?

First-year undergraduate dependent students can take out no more than $5,500 annually, and no more than $3,500 of that amount can be in subsidized loans. For dependent undergrads in their second year, the annual borrowing limit is $6,500, with no more than $4,500 in subsidized loans. Dependent undergraduates in their third and fourth years can take out up to $7,500, with no more than $5,500 in subsidized loans.

Graduate students can take up to $20,500 annually, but only in unsubsidized loans.

Do student loans have a term limit?

Yes. The maximum repayment term for federal student loans being repaid under an income-driven repayment plan is 20 years for borrowers with undergraduate loans and 25 years for those with graduate student loans.

Borrowers with federal consolidation loans have up to 30 years to repay them.

Are there different limits for graduate and undergraduate loans?

Yes, there are different limits for graduate and undergraduate loans. Undergraduate loans typically have lower annual and aggregate limits, ranging from $5,500 to $12,500 annually and $31,000 to $57,500 in total. Graduate loans have higher limits, up to $20,500 annually and $138,500 in total, including undergraduate debt.

What happens if I need more than the maximum loan amount?

If you need more than the maximum loan amount, consider alternative funding options such as private loans, scholarships, grants, or employer tuition assistance. You can also explore part-time work, internships, or reducing your course load to manage costs.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q325-022

A debilitating sickness or injury can be life-changing and make it challenging or impossible to pay back student loans. Because of this, borrowers who are considered “totally and permanently disabled” may qualify to have their student loans discharged through a federal forgiveness program known as Total and Permanent Disability Discharge.

Since this is a federal program, it only applies to federal student debt and not private student loans. Here’s what to know about student loan disability discharge and who is eligible for the program.

Disability Discharge of Student Loans

Student loan disability discharge relieves borrowers of their student loan responsibilities in the event of total and permanent disability. Receiving a Total and Permanent Disability (TPD) Discharge from the U.S. Department of Education means that a qualifying borrower does not need to pay back federal student loans or complete a TEACH Grant service obligation.

Can Student Loans Be Forgiven Due to Disability?

Federal student loans can be forgiven due to disability. Borrowers interested in a disability discharge need to apply for the program and provide documentation to show that they are considered “totally and permanently disabled.” The Department of Education will review the application to determine if an applicant qualifies.

In some instances, the Department of Education may receive information from the Social Security Administration (SSA) or the U.S. Department of Veterans Affairs (VA) that an individual may qualify for a disability discharge of student loans. In these cases of automatic discharge, the Department of Education may contact a borrower to provide information about requesting a TPD discharge.

You might also have a representative apply for you, such as a relative or an organization like a veterans’ service organization. To do this, you must submit an Applicant Representative Designation form for the other party to act as a representative on your behalf. The form must be processed by the Department of Education before they can work with the third party on a TPD discharge for you.

Again, the student loan disability discharge program only applies to federal loans, such as Direct Loans, FFEL Program Loans, or Perkins Loans. This program doesn’t apply to private student loans.


💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

What Is Student Loan Total and Permanent Disability Discharge?

A Total and Permanent Disability Discharge means that a qualifying borrower will not be required to pay back federal student loans or complete a TEACH Grant service obligation.

Loans included in the program are those issued by the William D. Ford Federal Direct Loan Program (Direct Loans), the Federal Family Education Loan Program (FFEL), and the Federal Perkins Loans. Borrowers in a TEACH Grant service program may also be relieved from having to complete whatever service obligation remains in their program.

Applying for Student Loan Disability Discharge

If you would like to apply for a disability discharge of student loans, the first step is to fill out a TPD discharge application.

You’ll also need to gather together documentation showing that you meet the Department of Education’s requirements for being “totally and completely disabled.” There are three ways to provide the necessary documentation:

1. Through the VA

If you are a veteran, you can work with the U.S. Department of Veteran Affairs (VA) to provide the documentation needed to prove that you are permanently disabled from a service-related injury.

2. Through the Social Security Administration

If you are already receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can use documentation from the Social Security Administration (SSA).

3. Through a Physician

You also can have a physician (an MD or DO), nurse practitioner (NP), physician’s assistant (PA), or certified psychologist certify that you are unable to earn money in any substantial way due to a physical or mental impairment. Here are the current official qualifications:

•   The impairment could result in death.

•   The impairment has lasted for a continuous period of at least 60 months.

•   The impairment can be expected to last for a continuous period of at least 60 months.

What Happens if I’m Approved for Student Loan Disability Discharge?

It depends on whether you were approved for a disability discharge through the VA, the SSA, or your physician.

If you provided documentation from the VA, the following will happen upon approval:

•   You’ll be notified of the discharge

•   Your loan holders will be instructed to return any loan payments received on or after the effective date of the disability determination

If you provide documentation from the Social Security Administration or from your physician, there will be an additional step if you qualify: You’ll be notified that you are subject to a three-year monitoring period. Your loans or TEACH work obligation could be reinstated if you don’t meet certain requirements at any time.

During the monitoring period, your obligations may be reinstated if you receive a new federal student loan under the Direct Loan Program or a new TEACH Grant, or if the SSA determines you are no longer disabled.

Recommended: Examining How Student Loan Deferment Works

What Is Student Loan Refinancing?

If you don’t qualify for a TPD discharge, there are other options for lowering student loan costs. You can contact your loan servicer to find out if you’re eligible for deferment or forbearance — or to see if you’re eligible for an income-driven payment plan, which bases your monthly payments on your discretionary income and family size, and generally results in lower payments.

Refinancing your student loans can also help you lower your repayment costs. With refinancing, you exchange your old loans for a new loan.

Because you’re using the new loan to pay off the existing loans, it’s possible to change the terms of the loan, such as securing a lower interest rate or shortening the loan term (both of which mean saving interest over the life of the loan). You could also lengthen the loan term (which can lower your monthly payments, but potentially result in paying more interest over the life of the loan).

Keep in mind that if you refinance federal loans, you’ll lose access to federal benefits and protections, including eligibility for TPD, income-driven repayment, or other federal loan programs such as deferment or forbearance. If you think you might want to pursue a disability discharge or other federal loan programs in the future, refinancing your federal loans may not be a good choice for you. If you have private loans, however, it may be worth exploring.

Refinancing Student Loans With SoFi

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What disabilities qualify for student loan forgiveness?

To receive federal loan forgiveness under the Total and Permanent Disability Discharge program, you must have a mental or physical disability that severely limits your ability to work now and in the future. You’ll need to provide documentation of this total and permanent disability through the VA, the SSA, or a healthcare provider.

Can you get student loan forgiveness if you become disabled?

A borrower can apply for a student loan disability discharge only if they become totally and permanently disabled. An individual who qualifies for a TPD discharge is not required to pay back their student loan or complete their TEACH Grant service obligation.

Do you have to pay back student loans if you are on disability?

If a person is receiving SSDI or SSI benefits from the Social Security Administration and their next disability review is not for another five to seven years, then a person is considered totally and permanently disabled and eligible to apply for a TPD discharge. A three-year monitoring period follows a TPD discharge that is based on documentation from either the SSA or a doctor.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.