Every spring, millions of families fill out the Free Application for Federal Student Aid (FAFSA) or compare private student loan options to help cover the next year of college tuition. But for many, there’s confusion about how long student loans last  and whether a single loan covers all four years of school.

It doesn’t.

Borrowers must apply for a new loan each academic year. This applies to both federal student loans and most private loans. The process may feel repetitive, but there’s good reason for the system: students’ academic paths, financial aid eligibility, and expenses shift from year to year. Plus, student loan rates may change from year to year as well!

You don’t need to borrow four years of tuition upfront, and you probably shouldn’t. Here’s what to know:

Why Loans Reset Each Year

Federal Direct Loans, the most common type of student loan for undergraduates, are awarded on an annual basis through FAFSA. 

Annual borrowing limits also differ based on a student’s year in school. For example, dependent undergraduate students can borrow up to $5,500 in their first year, $6,500 in the second, and $7,500 in each subsequent year. This prevents students from taking on large amounts of debt early on and encourages reassessment over time.

Private loans follow a similar path. Even though families can often find prequalification offers, nearly all private lenders require a new application and credit check each year. Once you borrow a private loan, that same lender will likely advertise to you aggressively to get the next loan through them, but you don’t have to.

In fact, it’s recommended that you shop for private loans every year to ensure you get the best rates and terms.

Adjusting For A Changing Journey

The college journey doesn’t always go as planned and borrowing yearly allows families to course-correct as needed.

According to data from the National Center for Education Statistics, only about 62% of students who start a bachelor’s degree finish within six years. Around one in three students transfer to a different school. And among those who do graduate, roughly 80% change majors at least once.

These factors have a direct impact on how much students need to borrow. Transferring can bring unexpected costs (or even decreased expenses). Changing majors can mean adding a fifth or sixth year of classes. And dropping out, often with debt but no degree, can be financially devastating.

Finally, college expenses are not static. Tuition can (and does) rise. Scholarships can be lost or gained. Housing needs may change. A student may move off-campus, take summer classes, or get a job that reduces their need for loans. All of these things can change the financial picture.

That’s why most financial experts recommend borrowing only what’s needed for the current year. It’s easier to reassess each year than to backtrack on unnecessary debt.

Student Loan Borrowers Will Not Be Harmed

While families might wish the process were more streamlined, it’s important to assess annually. You simply cannot predict what the future will cost.

Reapplying each year ensures that loans are based on up-to-date financial information. It gives students a reason to check in with their school’s financial aid office. And it avoids the risk of students overcommitting to years of debt upfront without knowing how long they’ll be in school or what their academic path might look like.

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