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What can I do if I overborrowed on my student loans?

5 options to reduce the monthly or overall cost of taking on too much debt.

Graduating with too much student debt can negatively affect your life — from limiting your career options to making it more difficult to get a mortgage or car loan. And overborrowing can also hurt you in the short term by maxing out your federal loan eligibility. If you took on more debt than you planned to, there are several steps you can take to reduce either the monthly or overall cost.

5 options if you overborrowed on your student loans

While overborrowing is less than ideal, there are several steps you can take to either reduce your monthly cost while you’re just starting in your career or get out of debt faster once you’re settled at your job.

1. Sign up for an income-driven repayment plan.

Federal income-driven repayment (IDR) plans give you repayments based on your salary, which change from year to year. These can be as low as $0 in some cases. Signing up for an IDR plan is generally a better deal if you borrowed more than your annual salary.

2. Consider forgiveness programs.

Depending on your job, you might be eligible for forgiveness on your loans. Look into federal programs as well as repayment assistance available for people in your field. You also might want to consider working for an employer that offers forgiveness as a benefit.

3. Sign up for a longer loan term.

You can typically sign up for a loan term as long as 25 years. While this will make your loan more expensive since there’s more time for interest to add up, it can make your monthly cost more affordable.

4. Consider a graduated repayment plan.

The Department of Education and a few select private lenders offer repayment plans that increase over time. This could be a good option for someone in a field that traditionally starts with low salaries but offers lots of opportunities for advancement.

5. Look into refinancing.

Refinancing is the only way to get a lower rate on your student loans, which can both lower your monthly and total loan cost. You might want to apply with a cosigner to make sure you get the best deal possible — especially if you’re a recent graduate.

If you’re thinking about refinancing your federal debt, just make sure you aren’t interested in the benefits that come with federal loans like income-driven repayments, federal forgiveness programs and a variety of deferment and forbearance options.

Is overborrowing on student loans the same as inadvertent overborrowing?

No, inadvertent overborrowing is when you borrow more than your annual limit for federal loans. If you inadvertently overborrow, you aren’t eligible to take out more federal student loans. You can reestablish your eligibility by repaying the amount you borrowed over the limit or signing up for reaffirmation, where you sign an agreement with your servicer to repay that extra amount.

You can learn more with our article on maximum federal student loan amounts.

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How much will overborrowing cost me?

It depends on how much you overborrow and the repayment plan you’re signed up for.

Let’s take a look at an example: Say your starting salary out of college is $50,000 after taxes. You took out a student loan at a 6% interest rate and signed up for the 10-year Standard Repayment Plan.

Here’s how much you’d pay if you borrowed $25,000 versus $40,000 for your degree:

$25,000 in student loan debt$40,000 in student loan debt
Monthly salary$4,166.67$4,166.67
Monthly repayment$277.55$444.08
Salary left after repayment$3,889.12$3,722.59
Total loan cost$8,306.15$13,289.84

In this case, you’d pay over 1.5 times as much each month, and almost $5,000 more in interest over the life of your loan by overborrowing.

How much will it cost me with a longer term?

Say you decided to get a longer term to help make your loan more affordable.

Here’s how much that $40,000 loan would cost you on a repayment plan with a 20-year term compared to the $25,000 loan with a 10-year term.

$25,000 in student loan debt$40,000 in student loan debt
Loan term10 years20 years
Monthly salary$4,166.67$4,166.67
Monthly repayment$277.55$286.57
Salary left after repayment$3,889.12$3,880.10
Total loan cost$8,306.15$28,777.38

Not only would you still pay more each month than you would have with $25,000 in debt with a 10-year term, but you’d also pay over three times as much in interest over the life of your loan.

How do I know if I borrowed too much?

Financial experts recommend graduating with student loan debt that’s no more than 50% of your starting salary. It’s projected that the average starting salary for students who graduated with a bachelor’s degree in 2019 will be around $69,000, according to the National Association of Colleges and Employees. This means you could have trouble paying off your loans if you graduate with more than $34,500 in debt.

Below are the average starting salary projections for the class of 2019 based on different majors — and the maximum you might want to borrow:

MajorApproximate starting salaryMaximum recommended debt
Math and sciences$62,000$31,000
Social sciences$57,000$28,500
Agriculture and natural resources$56,000$28,000

What other factors should I consider?

Where you live and the opportunity for growth in your career might affect this number. For example, if you plan on moving to a city with a high cost of living like San Francisco, you might want to borrow less to give your budget more room for rent. If you plan on going into a field with lots of opportunities for advancement, you might be able to afford to borrow a little more.

To get a more accurate picture, research job openings you could potentially qualify for in the city or town where you plan on settling down.

Bottom line

You generally shouldn’t borrow more than 50% of your expected starting salary if you want to stay on top of your student loan repayments and get the highest return on your investment. But you have several options to reduce the cost of your loan if you took on more student debt than you planned to.

You can learn more about how borrowing for school works by checking out our guide to student loans.

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