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But for a relatively low student loan amount, federal perks like income-driven repayment plans and forgiveness might not be so beneficial — you might want to see if you can qualify for a better deal with a private lender.
You might. It depends on several factors such as your year in school, whether the Department of Education (DoE) considers you a dependent, what type of loan you’re applying for and how much you already have in student debt.
Year in school | Independent federal loan limit | Dependent federal loan limit | Private student loan amount needed |
---|---|---|---|
First-year undergraduate | $9,500 | $5,500 |
|
Second-year undergraduate | $10,500 | $6,500 |
|
Third-year undergraduate and beyond | $12,500 | $7,500 |
|
Graduate or professional student | $20,500 | N/A |
|
Direct Subsidized and Unsubsidized Loans come with lifetime aggregate limits, depending on your degree. You can only borrow up to $57,500 as an undergraduate and $138,500 as a graduate student — including your undergraduate student debt.
With interest rates fixed at 2.75% for undergraduates and 4.3% for graduate students, Direct Subsidized and Unsubsidized Loans are often the best deal you can qualify for.
One option if you’re unable to borrow $10,000 is to apply for a PLUS Loan — these come with no limits other than your school-certified cost of attendance. Undergraduate students will have to have their parents apply for a PLUS Loan while graduate students must apply on their own.
To qualify, you need to pass a credit check or bring on a creditworthy endorser. And with interest rates fixed at 5.3% , you might find a better deal with a private lender.
Provider | Minimum loan amount | Rates | Eligibility | |
---|---|---|---|---|
EdvestinU | $1,000 | 1.88% to 4.25% with autopay | $30,000+ annual income for balances under $100,000, $50,000+ for balances over $100,000, US citizen or permanent resident, attended at a degree-granting school | |
CommonBond | $5,000 | 3.31% to 9.74% | You must be an American citizen or a permanent resident of the US and have good to excellent credit or a creditworthy cosigner. Education requirements: You must be enrolled at or graduated from an approved Title IV undergraduate, graduate or MBA program | |
Credible | $1,000 | Starting at 1.24% with autopay | Enrolled at least half time in qualifying US educational program, ages 18+ or apply with cosigner | |
Mpower | $2,001 | 7.52% to 14.98% | F-1 student visa, attendance at partner university and in last two years of degree program | Read review |
Raise | $2,001 | 7.52% to 14.98% | F-1 student visa, attendance at partner university and in last two years of degree program | Read review |
Almost all private providers offer $10,000 student loans. While these come with fewer perks than federal loans, for loan amounts as low as $10,000, you might not be able to benefit much from income-driven repayments or federal forgiveness programs anyway.
But they can be more expensive and might require a cosigner. Private loans also typically have lifetime limits, though they’re generally higher than federal student loans.
Sure, you can pay off your student loans by signing up for autopay and not thinking twice about it. But there are several ways you can save on interest and get out of debt quicker.
How long you take to pay back your loan affects both how much you pay each month and how much you pay in total interest. The longer your loan term, the lower your monthly repayments — but the more you’ll pay overall.
Say you had a $10,000 loan with a 5.8% APR — the national average. Here’s how much you’d pay per month and in interest with different loan terms.
Loan term | Monthly repayments | Total interest paid |
---|---|---|
5 years | $192.40 | $1,543.96 |
7 years | $145.13 | $2,190.81 |
10 years | $110.02 | $3,202.26 |
15 years | $83.31 | $4,995.62 |
20 years | $70.49 | $6,918.58 |
As you can see, lengthening your term can cut your monthly repayments down by nearly a third. But it also increases the total cost of your loan nearly 4.5 times. To save the most on interest, go for the shortest loan term with monthly repayments you can comfortably afford.
You might be able to cover a $10,000 student loan with federal loans only, depending on your year in school and how much you’ve already borrowed. But there’s a chance you’ll have to take out a private loan to cover the additional costs.
Learn more about how borrowing for school works in our guide to student loans.
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