The costs of college have never been higher, and student loans are one of the most popular ways to fund higher education. Are you wondering how many loans can you take out for college? In fact, students often take out more than one student loan for each academic year because there are so many sources of student loan funding, many of which have caps on the borrowing amounts. When students graduate, it is not unusual for them to have 10 or more separate loan accounts from all the different loans.
Federal Student Loans
If you are wondering how to take out more student loans, the first step is to understand the federal loans that are available to you. The federal government offers a few types of student loans, and students may take out multiple loans each year. According to Federal Student Aid.gov, the authority for colleges to make new Perkins loans ended in 2017, so these are no longer an option for students.
Subsidized Stafford loans have fairly low interest rates of 4.99 percent for undergraduates as of this writing, but students can borrow only $3,500 their first year, $4,500 their second and $5,500 each subsequent year. Unsubsidized Stafford loans have an interest rate of 6.54 percent and allow students to borrow $2,000 more each year on top of the subsidized Stafford loans, explains the team at Federal Student Aid.gov.
PLUS loans may also be an option for parents of undergraduate students or for graduate students. According to Federal Student Aid.gov, you can receive a PLUS loan for the amount of the cost of attendance (determined by the school) minus any other financial aid received. Interest rates vary depending on whether the loan is for graduate students or taken by the parents of an undergraduate student.
Private Student Loans
Students also can turn to private student loans to borrow money if they did not get enough through federal lending programs. Students will generally only need one private loan per school year because lenders usually allow students to borrow up to the full cost of attendance minus all other aid received.
Private student loan interest rates are usually variable and based on the prime rate plus an amount determined by the student and co-signer's credit scores.
Choosing an Aid Package
Students should fill out the Free Application for Federal Student Aid each year to have federal student loans included in their financial aid packages. Students should generally accept Perkins and subsidized Stafford loans first, because these have the lowest interest rates and the government pays interest while the borrower is in school.
After receiving all subsidized aid, students who need to borrow more should turn to other federal loans and receive the maximum amount possible from each of those. Students who still do not have enough money for school should then apply for private student loans directly with banks or credit unions. They may also be eligible for scholarships or grants.
Consolidating College Loans
After graduating, one way to simplify the process of repaying student loans is to consolidate them. Students can consolidate all of their federal loans together and consolidate all of their private loans together so they make no more than two payments each month. Federal student loan consolidation uses a weighted average interest rate so they will be able to keep the same effective interest cost. You should also look into forgiveness options that may or may not exist for you.
Extending the repayment period can lower the monthly payment if desired. With private student loan consolidation, the student applies for a new loan with a new interest rate and a specific repayment period.