Finding an affordable student loan package is important for any college student. Even before attending college or university, students have to consider the difficulties and costs they will encounter when faced with their student loan repayment after graduation. Most students will opt for federal funding but realize quite quickly that they have their limits. This results in students seeking supplemental funding from other sources. It is important that students understand what their limits are when applying for student loans, as these student loans will be a major financial burden on them for the first 10 to 20 years of their professional life.

3 Major Types of Student Loans — and their Limits

Federal Stafford Loans - Stafford loans are of two types:

• Unsubsidized: Any student irrespective of their financial need can access unsubsidized loan. Under this plan, interest starts accruing from the date of disbursement of the loan. However, students can delay the payment of these interests until they have graduated from their institution.
• Subsidized: Subsidized Stafford student loans are awarded based on the severity of the student’s financial need. To get this loan, students must apply through the Free Application for Federal Student loans form and provide the board with proof of their family’s financial inability to pay for the education out of pocket. Under this plan, the federal government will pay all interest on their student loan until the student begins repayment.

Under the Stafford student loans, first year students can access $3,500 as base loans and an additional $2,000 as unsubsidized loans. If their parents cannot access PLUS loans, the unsubsidized cap can increased to $6,000. Second year students have a base loan cap of $ 4,500 with a maximum of $6,000 in additional support if PLUS loans cannot be accessed by their parents. Third year students have a base loan cap of $5,500 with a maximum of $7,000 in additional unsubsidized support. Graduate students will only receive Stafford student loans if their parents cannot access PLUS loans and have a base of $8,500 with a maximum of $12,000 in additional support.

*The loan limits on Subsidized Stafford Student Loan dealt on a case-by-case basis.

Federal Perkins Loans - Federal Perkins student loans target undergraduate and graduate students with adverse financial conditions. Each institution makes these loans available to students from funding received from the government. Under this plan, students are allowed to defer their interest payments until all tuition, grace and deferment period is exhausted. These loans have a fixed interest rate of 5% that remains with the loan until it is repaid completely.

Undergraduate students can access Federal Perkins Loans with a loan limit of $5,000 per 1-year period with a cap of $27,000. Graduate students have an increased yearly Federal Perkins Loan limit of $8,000 with an accumulative loan limit of $ 60,000. For students pursuing non-graduate studies, such as Associate degrees, they have an accumulative loan limit of $11,000.

PLUS Loans: PLUS loans are supplemental loans that both students and parents seek to offset the immediate cost of education. However, with these loans, borrowers are required to start repayment as soon as the loan has been disbursed.

There is no specific limit placed on PLUS loans. The amount received based on the difference between the amount financial aid received under the Stafford or Perkins loan plans and the total cost of the education.