How much studentloandebt could a studentloandebtchuck chuck?

May 26, 2018 2:46 PM

Working on an absurd comedic story about student loan debt; some hypothetical questions: Is there an upper-limit to how much the feds will loan an individual? Assuming otherwise eligible for financial aid, at what point would the government just refuse to loan any more? For example, if someone kept enrolling in additional MA/PhD programs as they completed each one, so they'd just constantly be a student -- how long could they keep taking out loans and deferring payment before the feds would eventually stop loaning them money and/or come after them?
posted by Saxon Kane to Education (14 answers total)

Subsidized and Unsubsidized Loans (pretty easy one to Google)
posted by praemunire at 2:48 PM on May 26, 2018

Response by poster: That gives 138k as the upper limit for grad students, but I know that I've heard of people owing even more than that -- although I don't know if that included private loans as well.
posted by Saxon Kane at 2:54 PM on May 26, 2018

Were these people in a health profession? There are higher limits for students in these fields. This says that the aggregate maximum for medical students is 224k.
posted by brook horse at 3:06 PM on May 26, 2018

I have spoken to someone who claimed to owe $250k on student loans. I am finding it surprisingly hard to get a straight answer from the internet.

If you’ve hit the annual and/or aggregate limits on federal loans, but you still need additional funds to complete your education, consider private student loans as a potential option.

-- Loan Limits

Private student loans usually have an annual limit equal to the cost of attendance minus other financial aid. Most private student loans have aggregate loan limits of $75,000 to $120,000 for undergraduate students and higher limits for graduate and professional students. These aggregate loan limits usually include all student loan debt, including both federal and private student loans.

In some circumstances, college financial aid administrators may allow a dependent undergraduate student to borrow at the higher Direct Unsubsidized Loan limits available to independent students without requiring the parent to obtain a denial of a Parent PLUS Loan.

The annual loan limit for the Direct PLUS Loan (Parent PLUS Loan or Grad PLUS Loan) is the annual cost of attendance minus other aid received during the enrollment period. There is no aggregate loan limit. The loan limits are the same for both parents of undergraduate students as well as graduate students.

linky

I guess the next step would be finding the most outrageous tuition in the US.
posted by DoreenMichele at 3:31 PM on May 26, 2018 [1 favorite]

Anything beyond those limits would be private loans. I know someone with about 100k debt from undergrad because their parents took out the loans (the student co-signed at 17 without fully understanding or having it explained) and the parents handed the bill to the student when they graduated.
posted by tchemgrrl at 3:45 PM on May 26, 2018 [1 favorite]

So the thing that makes loan balances increase to well above the caps on federal loans is the high interest rates. It's really, really easy to have the balance balloon over the years to really stupid numbers, and difficult to refinance them at lower rates if you don't want to lose the protections afforded to borrowers.

So, yeah, be sure to include capitalized interest in your story. It's definitely the funniest thing that's ever happened to my finances...
posted by asperity at 3:49 PM on May 26, 2018 [4 favorites]

I heard about a guy with $1m in student debt from the USC dental grad program on Slate Money this morning. Apparently if he hits $2M the debt may be forgiven but he has to pay taxes on it.
posted by wotsac at 3:59 PM on May 26, 2018 [2 favorites]

This article might contain some good fodder:

I've Paid $18,000 To A $24,000 Student Loan, & I Still Owe $24,000

I had no idea so much of the money I was paying did nothing but abate rising interest, barely touching the principal sum.

(You can also see here that the interest rate for that loan isn’t 9.25 percent anymore. Because it's a loan with a variable interest rate, it’s up to 11 percent — a fact I only learned when I called to ask why my monthly payments had increased. As my lender matter-of-factly loan-splained, “We’re not legally required to disclose when we change your interest rate, as per the contract.” I had missed that clause in the multi-page contract I signed when I was 20.)
posted by DoreenMichele at 4:04 PM on May 26, 2018

PLUS loans aren't subject to the lifetime aggregate limit. Someone could have 250k in Federal loans as a combination of unsubsidized and PLUS
posted by Think_Long at 4:18 PM on May 26, 2018 [2 favorites]

$500k+ is a not-at-all-uncommon level of debt for a young doctor, who can borrow $100k for undergrad and $75k a year for med school and will accrue interest for eight years of enrollment forbearance and five more years of low IBR payments while in residency.
posted by MattD at 4:30 PM on May 26, 2018

Yup. My ex wife had half a million in student loans from undergrad and dental school. Most of that was private.
posted by postel's law at 5:02 PM on May 26, 2018

Well, first of all federal isn't the only game out there for student loans. So regardless of any federal limit, there's going to be people out there coping with more debt than that.

There was a recent article "Mike Meru Has $1 Million in Student Loans. How Did That Happen?" (behind a paywall unfortunately), and it's claimed that "There Are 101 Americans With Over $1 Million In Student Loans".
posted by yohko at 5:11 PM on May 26, 2018 [1 favorite]

This is wotsac's story reference: LINK
posted by The Architect at 5:53 PM on May 26, 2018

how long could they keep taking out loans and deferring payment before the feds would eventually stop loaning them money and/or come after them?

Speaking as someone currently doing this, after a while they only let you borrow the tuition amount and stop letting you take out the portion for living expenses. But in-school deferment seems possible forever.
posted by Jacqueline at 6:20 PM on May 26, 2018