First off, congratulations on graduate school! That’s an amazing accomplishment. Getting accepted to graduate school might mean having to go through the loan process. Again.
Now, they’re graduate student loans, which can sound more intimidating. The good news is they don’t have to be. The better news? This article will help you on the topic of graduate student loans. So, let’s get into it.
What Is A Graduate Student Loan?
A graduate student loan is a type of loan that pays for school expenses that go with a graduate degree program. Usually, you can get a lot more money with graduate loans than you would with undergraduate loans. That’s definitely a perk. On the flip side, most graduate loans will require a credit check of some kind, regardless of the type of loan. No matter the type of loan you decide on, it’s important to secure free aid like scholarships and grants first. It’ll help you out a lot in the long run.
Now, there are two basic types of graduate loans that you can get.
Federal Graduate Loans
Federal student loans are a great source of loan money for many reasons. For one, you’ll get benefits like flexible repayment options and possible loan forgiveness. Additionally, you’ll also get a six-month grace period after you graduate.
There are federal student loans for any kind of student, including graduate students. The two types of federal loans you’ll be able to get as a graduate student are Direct Unsubsidized Loans and Direct PLUS Loans.
Direct Unsubsidized Loans are available to undergraduate, graduate, and professional students. There is no need to prove financial need. As long as you are enrolled in a school or program at least half time, then you are eligible to receive this. The most amount of money you can borrow each year as a graduate or professional student is $20,500. The interest rate, as of April 2022, is 5.28%.
Direct PLUS Loans are available to graduate or professional students. They’re also available to parents of dependent, undergraduate students. As a grad student, you’d be getting a grad PLUS loan. There is a credit check for this type of federal loan, but it’s only to check for adverse credit history. An adverse credit means things like bankruptcy, delinquent accounts, and defaults. As long as you don’t have any of that, you’re good. If you do have an adverse credit history, you’ll probably need to add a cosigner to qualify. The most that you can borrow with your grad PLUS loan is the cost of attendance minus other aid received. The interest rate, as of April 2022, is 6.28%.
Private Graduate Loans
There are many lenders that offer student loans for graduate students. Like undergraduate private loans, each lender will have their own terms. So, it’s important to look around and inform yourself of the terms of each loan option.
You’ll want to pay close attention to aspects such as the repayment terms, interest rates, and fees. Always ask lenders if they offer borrower protections or loan perks such as an autopay discount. An autopay discount might lower your interest rate if you sign up for auto payments.
Because private lenders give out the money, there will be a lot more requirements. Some factors considered are your credit score, current income, and potential future earnings. Your current income, especially, may play a big role. You may have to start repayment as soon as it’s disbursed, which is when you’re in school. So, you want to make sure that you afford it.
The maximum amount you can borrow depends on each lender. Generally, you want to only borrow any remaining cost you have after accepting other forms of aid. And, always be conscious of how much you are borrowing. Remember that while borrowing $10,000 for one year may not seem like a ton, you will likely need to borrow following years as well. Make sure you are thinking of your overall debt, not just the amount you’re borrowing each individual year.
How to Apply for Graduate Student Loans
Each type of graduate loan has a different process when it comes to applying. For federal student loans, you have to fill out the FAFSA. Fill it out as soon as it’s available on October 1st. The earlier you fill it out, the better your chances are of getting money. The FAFSA alone is enough to apply for Federal Direct Unsubsidized Loans. Federal Direct PLUS Loans, on the other hand, require an extra application. Check with your school for the application and information on eligibility requirements.
Now, for private student loans, you’ll generally have to apply with each lender individually. I know. I know. It’s a lot of work. Lucky for you, Sparrow helps make this process easier. With Sparrow, you can fill out a single application. This will match you to what loans you qualify for at 15+ top lenders. Save the ones you like and compare them before deciding. Using Sparrow will save you a lot of time, money, and sanity. All you have to do to get started is create a free account.
Final Thoughts from the Nest
This phase of your educational career is no doubt exciting and stressful all at the same time. Let us help you by providing guides such as these and making the loan searching process easier. Take a deep breath, create an account, and let some of the weight fall off your shoulders.