The average graduate student borrower leaves school with $71,000 in student debt. This is on top of undergraduate student loans, bringing the average debt total for graduate students to $82,800.
While an exciting new chapter of your life, financing your graduate education may feel overwhelming. Before selecting a loan to pay for graduate school, it’s important to understand what your options are.
Federal and Private Loan Options
Federal Loan Options for Graduate School
Direct Unsubsidized Loans
Direct Unsubsidized Loans are available to eligible undergraduate, graduate, and professional students. Eligibility is not based on financial need.
How much can you borrow in Direct Unsubsidized Loans?
Graduate students can borrow up to $20,500 annually in Direct Unsubsidized Loans. There is a lifetime limit of $138,500.
Direct PLUS Loans
Direct PLUS Loans are available to eligible graduate and professional students as well as parents of dependent undergraduate students. Eligibility is not based on financial need, however, a credit check is required. If you have adverse credit history, you will need to meet additional requirements to qualify.
How much can you borrow in Direct PLUS Loans?
In Direct PLUS Loans, graduate students can borrow up to the cost of attendance minus any financial aid already received.
Private Loan Options for Graduate School
There are a variety of private lenders, such as banks and financial institutions, that work with graduate students. Each individual lender will have its own unique eligibility requirements and borrowing limits. You can check your eligibility across 15+ lenders in one application using Sparrow.
What Makes A Graduate School Student Loan Good?
When borrowing a graduate school student loan, you should review a variety of factors to ensure it’s a good fit for you.
Cosigner vs No Cosigner
A cosigner is an individual who signs onto a loan alongside you. By signing onto the loan, the cosigner takes full responsibility for the loan should you fail to pay it back. Having a creditworthy cosigner can help you secure a lower interest rate and better terms.
Most graduate school student lenders will offer both cosigned and non-cosigned loan options. If you are searching for a student loan on your own, a non-cosigned loan option may be a good fit for you. However, if you do have access to a creditworthy cosigner, having them sign onto the loan may help you score better terms.
A creditworthy cosigner is someone who:
- Has a stable income. If you are unable to make payments on your loan for any reason, your cosigner will be responsible for doing so. Make sure that your cosigner is in a position to make those payments if necessary.
- Has little to no debt themselves. Again, if you are unable to make payments, you want to be sure your cosigner is in a financial position to make them. Balancing multiple debt payments could make it more difficult for the cosigner to manage yours.
- Has a high credit score. A cosigner can help you secure a lower interest rate on your loan if they have a high credit score.
- Has a solid debt repayment history. When you add a cosigner to your loan, the lender will evaluate their financial history. Having a solid debt repayment history shows the lender that the cosigner is responsible, and therefore, scores you a lower interest rate.
Minimum Income Requirements
If you are pursuing a graduate education immediately after your undergraduate education, you may not have a full-time income just yet. Many private student lenders require a minimum income to borrow. So, you’ll either need to meet that minimum income requirement or have a creditworthy cosigner who does.
There are also lenders that offer non-cosigned loan options with no minimum income requirement. Be sure to evaluate your options and select the loan that best aligns with your borrower profile.
Interest Rate
Each student loan will have its own unique interest rate and terms. If borrowing a loan with a cosigner, your interest rate will likely be lower. If borrowing a loan without a cosigner, your interest rate will likely be higher. Compare interest rates carefully to select the loan that is best for you.
Repayment Options
Each individual lender will offer a unique set of repayment options. While some lenders will allow you to defer repayment while in school, others will require immediate repayment. For example, MPOWER borrowers are required to make interest-only payments starting 45 days after loan funds have been disbursed. On the other hand, lenders such as SoFi and Sallie Mae offer several repayment options including deferred repayment.
Be realistic about which repayment options would work best for you. Always review your options carefully before selecting a loan.
Our Picks for Graduate School Student Loans
The best student loan will always be the one that works best for you. However, the following are our top picks for graduate school student loans.
Arkansas Student Loan Authority
The Arkansas Student Loan Authority (ASLA) is an Arkansas state entity that provides educational funding for all Arkansas students who wish to attend higher education institutions. ASLA is a great option for Arkansas students.
Ascent – Cosigned Loans & Non-Cosigned Loans
Ascent is an online lender that offers three types of student loans: a traditional cosigned loan, a non-cosigned credit-based loan, and a non-cosigned outcomes-based loan. Collectively, the three options provide a great selection for those who do not have a cosigner available, are international or DACA students, or have lower credit scores.
Brazos is a non-profit lender offering private student loans to Texas Residents. They offer a wide range of loan options, covering undergraduate, graduate, MBA, law, medical, dental, veterinary, and doctoral degree programs. Brazos is a great option if you live in Texas, have strong credit, and want competitive interest rates.
College Ave’s student loan offering is available for undergraduate, graduate, professional, and career school students, as well as parents of students. It’s best if you are seeking a more flexible repayment term that allows you to find a loan that matches your budget.
Earnest’s student loans are available to undergraduate, graduate, and professional students. It is best if you are seeking competitive interest rates, unique borrower perks, and flexible repayment options that allow you to find a loan that matches your budget.
By connecting borrowers with a network of 100+ lesser-known credit unions and community banks, LendKey allows you to work with smaller lenders with low rates and good customer service, rather than traditional lending institutions. LendKey’s student loan offering is available to undergraduate and graduate students. It’s best if you have strong credit and want generous cosigner release and forbearance policies.
MPOWER is an online lender that offers non-cosigned undergraduate and graduate student loans to international, domestic, and DACA students. It is best for international students and DACA students who don’t have a credit history and can’t access a qualified cosigner.
Prodigy Finance is an online lender that offers non-cosigned graduate student loans to international students. It is best for international students who don’t have a credit history and can’t access a qualified cosigner.
Sallie Mae is an online lender that offers cosigned and non-cosigned undergraduate, graduate, and career training student loans. It is best for students seeking competitive interest rates with a creditworthy cosigner.
SoFi is a strong option for undergraduate, graduate, law, and MBA students, as well as parents looking to fund their child’s education. With competitive interest rates, a diverse set of repayment options, and exclusive member benefits, SoFi is a good fit for borrowers with a strong credit score or a creditworthy cosigner.
How to Apply for a Graduate School Student Loan
To apply for a graduate school student loan:
- Check your eligibility. Sparrow allows borrowers to check their eligibility with 15+ lenders in one free application.
- Compare loan options. After seeing which lenders you qualify with, we’ll show you your loan options side-by-side. You can evaluate the loan options to see which one you’d like to pursue.
- Wait to hear back. After selecting the lender you’d like to pursue, you can submit a formal loan application with them. It can take a few days to a few weeks to hear back from the lender about whether you’ve been approved.
- Ensure the funds were disbursed. After your school certifies the loan, the lender will let you know. Then, the money will be sent to your school. Always follow up with your school to confirm that the funds were properly disbursed.
Final Thoughts from the Nest
Going to graduate school is an exciting new chapter. While funding that education can be overwhelming, we’ve got your back.
The most important thing to remember: Always evaluate your loan options carefully. Be sure that the loan you select feels right. If it doesn’t, keep browsing until you find one that does.
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