It used to be all you needed for a successful career was a bachelor’s degree. Now, that’s no longer the case. According to the Bureau of Labor and Statistics, 18 percent of jobs will require master’s degrees by 2022, and faster growth is expected for occupations that typically require graduate-level degrees.
However, graduate school can be expensive, costing between $30,000 and $120,000. If you don’t have enough money to pay for school in your savings account, you might need to consider student loans to pay for school.
Student Loan Options for Graduate School
When it comes to paying for graduate school, you have several student loan options. You can use federal loans, private loans, or a combination of both to finance your education.
Federal Student Loans
If you’re considering taking out student loans, it’s a good idea to start with federal loans. They often have more generous repayment terms — such as the ability to enter into an income-driven repayment plan — making student loan repayment easier after graduation.
To qualify for federal student loans, make sure you complete the Free Application for Federal Student Aid (FAFSA) as soon as possible.
As a graduate-level student, you’re eligible for the following two types of federal loans:
1. Direct Unsubsidized Loans
Direct Unsubsidized Loans are available to graduate students, regardless of financial need. You can borrow up to $20,500 per year, with an aggregate limit of $138,500 which includes loans from undergraduate study. Loans issued after July 1, 2019 and before July 1, 2020 have an interest rate of 6.079%.
Loans disbursed between October 1, 2018 and October 1, 2019 have an origination fee of 1.062%.
To be eligible for a loan, you must be enrolled at least half-time at a qualifying school.
2. Direct PLUS Loans
As a graduate student, another option to pay for school is to take out a grad PLUS Loan. Unlike Unsubsidized Loans, which have limits on how much you can borrow, PLUS Loans allow you to borrow enough to cover the total cost of attendance, with no cap.
Loans disbursed after July 1, 2019 but before July 1, 2020 have an interest rate of 7.079%, the highest of any federal loan. In addition, PLUS Loans also have loan fees. Loans disbursed before October 1, 2019 have a fee of 4.248%, which is a percentage of your loan.
To qualify for a PLUS Loan, you need to be enrolled at least half-time at an eligible institution. While most federal loans don’t require a credit check, PLUS Loans do. If you have an adverse credit history, you may need an endorser to co-sign the loan with you to qualify.
Private Student Loans
While federal loans can be useful tools, they’re not for everyone. You may not qualify for enough federal loans to cover the full cost of your program and have to pursue private loans. Or, if you have good credit, it can be worth shopping around for private student loans to get a lower interest rate.
Unlike federal loans, which are issued by the government, private student loans are handled by individual banks and lenders, like College Ave Student Loans. Each lender has their own eligibility criteria and limits, but in general, they’ll look at your credit score and income to determine if you qualify for a loan or not.
Private loans can be beneficial to graduate students, because they may offer more repayment flexibility. For example, College Ave grad school loans allow you to pick repayment terms as long as 15 years, reducing your monthly payment. You can choose different repayment options or even defer your payments until after graduation. And, there are no origination, application or prepayment fees.
You also may be able to save money by opting for a private loan, as they may have lower interest rates. For example, if you have good credit you may qualify for a lower fixed interest than the interest rate on PLUS Loans. Over time, the savings can be significant.
For example, let’s say you borrowed $35,000 to pay for school. If those loans were PLUS Loans at 7.6% interest and you stuck to a 10-year repayment term, you’d repay a total of $50,074; interest charges would cost you over $15,000.
But if you took out a private student loan for $35,000, 10-year repayment term, and qualified for a 5.97% interest rate, you’d have a smaller monthly payment and you’d repay just $46,565. Choosing a private student loan over a PLUS Loan would help you save over $3,500.
However, you should keep in mind that private student loans are ineligible for federal benefits like income-driven repayment plans or Public Service Loan Forgiveness. Before taking out a private loan, make sure you consider whether or not you’ll need those benefits later on.
Paying for Graduate School
Attending graduate school can help you boost your income and career potential. If you’re researching how to pay for graduate school, look at all of your student loan options, including federal and private loans.
If you decide that a private student loan is right for you, you can submit your loan application online.
