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Graduate Student Loans: Compare Federal and Private Options

Grad school is expensive, and most people have to borrow in order to be able to afford to attend. If you are considering attending grad school, it will be important for you to ensure you can qualify for loans on favorable terms as well as other sources of financial aid.

This guide to graduate student loans will help you understand the kind of federal loans you could obtain through filling out your FAFSA and will also provide insight into other loans you can obtain, including private loans.

Federal Graduate Student Loans

To become eligible for federal loans, you need to fill out the Free Application for Federal Student Aid (FAFSA). The FAFSA is required to gain access to loans from the Department of Education, as well as to obtain many types of grants and scholarships provided by the government or your school.

Filling out the FAFSA as soon as you can is important because some sources of aid are limited and may be gone if you wait. You also don’t want to pass those up, because federal loans come with borrower protections private loans don’t offer.

The FAFSA becomes available in October each year and can be completed any time over an 18-month period until June of the following year. So, for the 2019 to 2020 school year, the FAFSA can first be filled out on Oct. 1, 2018, and the latest it can be completed is June 30, 2020. It can be completed at the Federal Student Aid website, and you’ll need financial information about income and assets when completing the form.

Grad students have a choice of two different types of federal student loans to help cover graduate school costs. These are:

Direct Unsubsidized Loans

While undergrads can obtain Direct Subsidized and Direct Unsubsidized Loans, grad students are restricted only to Unsubsidized Loans. This means the government does not pay interest on the loans while you’re in school or in deferment after graduating.

Direct Unsubsidized Loans still have favorable loan terms, including a low fixed interest rate. Before you borrow, you need to understand all of these key loan terms:

  • Graduate students can borrow a maximum of $20,500 per year in Unsubsidized Loans. And the maximum aggregate limit for both subsidized and unsubsidized loans, including for undergrad and grad loans, is $138,500.

  • To be eligible, grad students must be enrolled at least half-time in an academic program that confers a degree or certification and that participates in the Direct Loan Program. You also must complete the FAFSA.

  • The interest rate for loans disbursed between July 1, 2018, and July 1, 2019, is 6.08% for graduate or professional students.

  • For loans distributed between Oct. 1, 2018, and Oct. 1, 2019, there is a 1.059% loan origination fee.

Your credit score is not a factor when your eligibility for Direct Unsubsidized Loans is determined.

Direct PLUS Loans

PLUS Loans for graduate students are another option for students seeking federal loans. However, they have different rules and eligibility requirements than Direct Loans.

  • The maximum PLUS loan amount you can borrow equals the cost of attendance at your graduate or professional program minus any other sources of financial aid, such as Direct Unsubsidized Loans, scholarships, and grants.

  • To be eligible, graduate or professional students must be enrolled at least half time in a program that will lead to a graduate degree, professional degree, or certificate. You also can’t have an adverse credit history, and you must meet the general requirements associated with getting financial aid.

  • For loans distributed between July 1, 2018, and July 1, 2019, the interest rate for Direct PLUS loans is 7.08%.

  • There is an origination fee of 4.236% for loans distributed after Oct. 1, 2018, and before Oct. 1, 2019.

It’s important to note that you cannot qualify for Direct PLUS loans with bad credit, unlike Unsubsidized Loans. The interest rate and origination fees are also fixed, as with Unsubsidized Loans, but the relatively high rate and fees mean that sometimes private student loans are more affordable.

Read the full article here: Graduate Student Loans


Thank you to LendEDU for this wealth of information. LendEDU is a website that helps consumers learn about and compare financial products, including student loans, personal loans, credit cards, insurance products, banking products, and more. Their goal is to help you make confident decisions.

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