Attending graduate school can often increase your long-term earning potential, but also leave you with tens of thousands in graduate school loans. The cost of going back to school, however, often intimidates candidates even before starting the application process. Luckily, we’ve compiled everything you need to know about graduate school loans so you can make a savvy, informed decision on how to best finance your education.
Graduate students seeking graduate school loans have the option of both federal and private loans. Federal loans carry fixed interest rates and the rates are subject to change each year. For an idea of federal student loan interest rates, here area few loan options that are currently offered as graduate school loan options.
Direct unsubsidized loans:
Current rate: 5.84% (Loans first disbursed on or after 7/1/15 and before 7/1/16)
For unsubsidized loans like the Stafford, you’ll also pay an annual loan fee of 1.068% (disbursed after October 1, 2015) that is deducted from your loan amount at the time of disbursement. Interest will begin accruing as soon as the loan is disbursed. This means that you may want to consider making interest payments while in school to keep your total cost of repayment down.
As long as you meet basic eligibility qualifications and have good credit with no college loan defaults, you will likely be approved for a federal Stafford loan. This unsubsidized loan allows graduate students to borrow up to $20,500 a year, though you may not exceed $138,500 in both undergraduate and graduate loans. Students studying certain health industries have a higher cap at $224,000 over the course of their lifetime. Unlike subsidized undergraduate loans, you do not need to demonstrate financial need to receive this funding, though you will still need to apply using the FAFSA.
Direct PLUS loans:
Current rate: 6.84% (Loans first disbursed on or after 7/1/15 and before 7/1/16)
For a PLUS loan the fee is 4.272%. Both types of loans are unsubsidized, so interest will begin accruing as soon as the loan is disbursed. This means that you may want to consider making interest payments while in school to keep your total cost of repayment down.
Graduate students may also apply for federal PLUS loans to help with living expenses and other costs beyond tuition. You will need good credit to qualify and must complete mandatory entrance counseling before receiving the loan. Because graduate loans are credit-based, not need-based, you can apply using only your own financial information, rather than your parents’ like you did as an undergraduate.
Current rate : 5%
Perkins loans are offered to graduate school students in exceptional financial need. Perkins loans are not offered by all universities and with Perkins loans, your school becomes the lender. The Perkins graduate school loan, offers up to $8,000 per year, with a maximum of $60,000 for undergraduate and graduate school loans.
Private Student Loans
If you still need help financing your graduate school tuition, consider applying for a private loan. The private loan market is competitive, so shop around with several different lenders to find the best terms. Many private loans start off with enticing low interest rates compared to federal loans, but are variable and may change dramatically over time. There are many private school lenders that offer both variable and fixed graduate student loans at competitive rates.
Financing your graduate education doesn’t have to be overwhelming. There are plenty of graduate school loan options available to ensure you fulfill your professional goals.
If you already have graduate school loans and are looking for better ways to manage your debt or want to explore private student loan options, see how Credible can help.