The 5500 student loan refers to the annual maximum borrowing limit for Direct Subsidized and Unsubsidized Loans available to undergraduate students under the U.S. Department of Education’s federal student aid program. Specifically, 5500 dollars is the total loan limit for first year dependent undergraduate students.
This amount includes both subsidized and unsubsidized loans. For example, a first year dependent student may borrow up to 3500 dollars in subsidized loans and an additional 2000 dollars in unsubsidized loans, totaling 5500 dollars. Subsidized loans do not accrue interest while the student is enrolled at least half time, whereas unsubsidized loans begin accruing interest immediately.
The exact amount a student can borrow depends on their year in school, dependency status, and cost of attendance. Independent undergraduates and those whose parents are unable to obtain a PLUS loan may qualify for higher unsubsidized loan limits.
These federal loans offer fixed interest rates, income driven repayment options, and potential loan forgiveness programs, making them a safer choice compared to private loans. Students must complete the Free Application for Federal Student Aid to be considered for these loans.
It is important to borrow only what is necessary, as all student loans must be repaid with interest after graduation or dropping below half time enrollment.