How to Get a Loan for Graduate School: 4 Excellent Options
If you’re one of the more than three million students pursuing an advanced degree this year, you might be wondering how to get a loan for graduate school. While you don’t want to take on too much debt, a manageable loan could help you cover costs until you graduate and start your career.
If you’re looking to take out loans for grad school, read on for our listing of the four best options — specifically:
How to get a loan for graduate school
As a graduate student, you could be eligible for a student loan from the federal government, a private lender or your own school, especially if it has its own credit union. Below are your four best options for borrowing graduate student loans that work for your budget.
Just as it does for undergraduates, the Department of Education (ED) offers federal student loans to grad students. The loan limits tend to be higher, but unfortunately, so are the interest rates. To qualify for these federal graduate student loans, you’ll need to submit the FAFSA first.
Once you do, you’ll be able to borrow Direct unsubsidized loans from the ED. Since these loans aren’t based on need, you aren’t required to demonstrate financial hardship to qualify. Beyond meeting citizenship requirements, all you really need to do is enroll in school at least half-time.
Your school will decide exactly how much you can borrow in Direct unsubsidized loans. That being said, the government sets an annual limit of $20,500 per year and a lifetime limit of $138,500.
As unsubsidized debt, these graduate school loans collect interest from the date they’re disbursed. They all have a fixed interest rate of 6.6%. Plus, they come with a loan fee of 1.062%.
Since these graduate school loans are federal, they’re eligible for federal repayment plans, like income-driven repayment and deferment. You could also potentially qualify for loan forgiveness, depending on your profession.
If your Direct unsubsidized loans don’t cover the full cost of grad school, you might consider borrowing a Grad PLUS loan from the federal government. You can borrow up to the cost of attendance of your school, minus any other aid you’ve already received. To date, 1.4 million borrowers have taken out $75.2 billion in Grad PLUS loans.
PLUS loans have a fixed interest rate of 7.08% and an origination fee of 4.236%. Unlike Direct unsubsidized loans, PLUS loans require that the borrower doesn’t have an adverse credit history. If you have poor credit, you might need to apply with a creditworthy endorser.
Beyond submitting the FAFSA, you might have to fill out another application for a PLUS loan. Your school’s financial aid office will tell you how to apply. Before getting the loan, you’ll also sign a PLUS Loan Master Promissory Note agreeing to all the terms.
Besides knowing how to get a loan for graduate school from the federal government, it’s also important to learn how to take out loans for grad school from private lenders, such as banks or online lenders. Citizens Bank and College Ave, for example, both lend fixed and variable annual percentage rates (APRs) student loans to people going back to school.
Each private lender sets its own requirements for borrowing a loan. Most look for a steady income and decent credit score. If you don’t qualify, you could try applying with a creditworthy co-signer.
Keep in mind, though, that private lenders aren’t always as flexible as the ED when it comes to repayment. They typically don’t offer income-driven repayment plans, nor do they grant student loan forgiveness.
Before agreeing to a private loan, make sure you read the fine print about repayment. Use a student loan calculator to anticipate your monthly payments and how much you’ll have to spend on interest. And speak with the lender about your options in case you run into financial hardship later.
Private student loans help many students finance an advanced degree — but you should know what you’re getting into before going too much into debt.
If you do decide a private student loan is right for you, make sure to shop around and compare offers from multiple lenders. By doing your due diligence now, you can find your best rate and most flexible repayment terms.
Finally, it’s worth noting that some universities can hook you up with a low-interest loan from their own credit unions. Harvard has its own credit union, for instance, as does UCLA in partnership with other schools.
College-based credit unions tend to have competitive rates and excellent customer service. Speak with your financial aid office to find out whether this option is available to you.
Going back to school for your master’s or Ph.D. is an investment in your education and career. Hopefully, your degree will pay for itself by increasing your earning potential.
But before taking out graduate student loans, consider the return on investment of your graduate degree. Figure out what your student loan repayment will look like and how you’ll manage it.
Furthermore, explore all your options for graduate school student loans. Look for competitive interest rates, flexible repayment terms or whatever other factors best suit your needs.
With careful planning, you can avoid taking on too much student debt. Then, you can focus on earning your advanced degree and achieving your personal and professional goals.