Graduate Student Loans: Compare Federal and Private Options

Graduate student loans are financing options designed to help students pay for graduate school. Since federal loans offer better borrower protections, you should always consider them before taking out private loans.

This guide to graduate student loans will help you understand what kind of federal loans you can obtain, as well as which private loans to consider in case you max out your federal borrowing limits.

In this guide:

• Federal Graduate Student Loans
• Federal Loan Benefits and Drawbacks
• Repayment on Federal Graduate School Loans
• Private Graduate Student Loans
• Private Loan Benefits and Drawbacks
• Repayment on Private Graduate School 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.

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

• Direct Unsubsidized Loans
• Grad PLUS Loans

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 (a type of Stafford Loan) 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 current interest rate on these loans is 6.6% for graduate or professional students.
• For current origination fee on these loans is 1.062%.

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

Grad PLUS Loans

Grad PLUS Loans—which are a part of the Direct PLUS Loan program—are another option for students seeking federal loans. However, they have different rules and eligibility requirements than Direct Loans.

• The maximum Grad 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.
• The current interest rate for new Direct PLUS loans is 7.6%.
• The current origination fee on new loans is 4.248%.

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.

Federal Graduate Student Loan Benefits and Drawbacks

There are both advantages and disadvantages to funding your graduate school with federal student loans.

Federal Graduate School Loan Repayment

There are many federal student loan repayment plans, including the following:

• Standard repayment plan: Loans are repaid over 10 years on a fixed repayment schedule.
• Graduated repayment plan: Loans are repaid over 10 years (or up to 30 years if you consolidate your loans), and payments increase every two years.
• Extended repayment plan: You can either chose from a fixed or graduated repayment schedule, and your loans are repaid over 25 years.
• REPAYE: Payments are capped at 10% of discretionary income. Any outstanding balance on your loans is forgiven after 25 years of payments if you took out loans for grad school.
• PAYE: Monthly payments are capped at 10% of discretionary income, but the payment can’t exceed the amount you’d have paid under the standard repayment schedule. Any outstanding balance on your loans is forgiven after 20 years of payments.
• Income-Based Repayment: Payments are capped at either 10% or 15% of monthly income, and any outstanding balance on your loans is forgiven after 25 years.
• Income Contingent Repayment: Monthly payments equal the lesser of 20% of discretionary income or the amount you’d pay on a fixed payment schedule over 12 years. Any outstanding loan balance is forgiven after 25 years.
• Income-Sensitive Repayment: Monthly payment is based on annual income, but your loan is repaid in 15 years.

Many of these repayment plans have specific qualifying requirements you will need to meet, so be sure to talk with your loan servicer to choose the right one.

Private Graduate Student Loans

Unlike federal student loans, private student loans don’t just come from one source, and they don’t have one fixed interest rate. There are multiple lenders offering private loans to grad students, including banks, credit unions, and online lenders. There is a lot of variation in rates and terms, so you should shop around carefully to make sure you’ve found the best lender for your needs.

>> Read More: Best Student Loans

Here are a few private lenders that offer both graduate school loans as well as loans focused on helping students pursuing healthcare degrees to cover their educational costs.

PNC

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Fixed APR

4.52% – 10.84%

Variable APR

4.90% – 11.11%

Repayment Terms

5, 10, or 15 years

PNC student loans are available both to graduate and professional students earning an advanced degree while they work. Variable rates for grad students run from pnc-psl-25-varlow% to pnc-psl-25-varhigh%, and fixed rates fall between pnc-psl-25-fixlow% and pnc-psl-25-fixhigh%. Graduate students can borrow up to pnc-psl-25-amounthigh. To be eligible, you need to be enrolled at least half-time in a degree or certified program, and you need to have an acceptance letter from the school before you apply.

Sallie Mae

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Fixed APR

5.74% – 11.85%

Variable APR

4.62% – 11.47%

Repayment Terms

5 to 15 years

Sallie Mae provides student loans with variable rates from 4.87% to 10.23%. You could also obtain a fixed rate loan with rates between 6.25% and 10.23% APR. You can borrow up to the amount of your school-certified costs. To be eligible, you’ll need to attend a participating school, be a U.S. citizen or permanent resident, and pass a credit check.

Ascent

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Fixed APR

3.97% – 12.93%

Variable APR

3.63% – 12.90%

Repayment Terms

5, 10, or 15 years

Ascent student loans offers both a cosigner and no-cosigner program to graduate students. Interest rates run from ascent-psl-27-alllow% to ascent-psl-27-allhigh% on Ascent Independent loans (no cosigner). Rates run from ascent-psl-26-alllow% to ascent-psl-26-allhigh% on Ascent Tuition loans (cosigned). To be eligible, you need to be enrolled at least half-time in an undergrad or graduate degree at an eligible university, and you must be a U.S. citizen or have permanent resident status (or have a cosigner who is one). To qualify without a cosigner, you also need to demonstrate creditworthiness.

College Ave

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Fixed APR

5.29% – 12.78%

Variable APR

4.20% – 11.44%

Repayment Terms

5, 8, 10, or 15

College Ave offers student loans for graduate school with variable rates starting between 4.07% and 9.37% or fixed rate loans with rates between 5.29% and 10.45%. There are no fees to apply, and you can borrow as much as the school-certified cost of attending your graduate program. You need to pass a credit check, be a U.S. citizen, and be working towards a degree with a participating institution.

Specific Graduate Student Loans

If you are looking for a specific graduate student loan, you can check out one of the pages below to compare options.

• Law School Loans
• PhD Student Loans
• Medical School Loans
• Dental School Loans

Private Graduate Student Loan Benefits and Drawbacks

There are both pros and cons to consider when using private student loans.

Private Graduate School Loan Repayment

When you repay private student loans, your repayment terms will vary by lender. Many private lenders offer five-, 10-, or 15- year repayment terms. Your payments are always structured to allow you to pay off your loan by the end of the loan term. There are no options for income-based repayment or loan forgiveness.

And while you can change your payment plan with federal student loans, you can’t just switch payment plans or change your loan term once you’ve taken out a loan. If you want to change the way you pay back private loans, you would have to refinance your loan.

You Have Many Options for Grad School Loans

As you can see, you have multiple options for grad school loans, each with their own pros and cons. Be sure to understand qualifying requirements and loan terms before you decide how to borrow — and know how you’ll pay back your loan to ensure it is affordable on your salary after graduation.