Student Loans for Graduate School

Kelly Hernandez
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If you’re striving to advance your career, earning your master’s degree may be a smart move. When you attend graduate school, you further your education and may be approached with opportunities for advancement within your industry. Adding a graduate degree to your resume is impressive for potential employers because it shows your commitment to education and your motivation to learn everything you can about your field.

While your master’s degree may help you land a great job or advance in your current career, it doesn’t come without a cost. Tuition and other educational expenses add up quickly. If you didn’t save enough money to cover your college education, you may need to turn to student loans to get you through.

Graduate student loans are different than loans you may have utilized while earning your undergraduate degree. Learning more about your graduate student loan options will help you create a realistic financial plan that doesn’t leave you in debt for years to come.

What Are Graduate Student Loans?

Graduate student loans are loans students may obtain to help pay for tuition or other education-related expenses as they earn their master’s degrees. Students are required to pay these loans back with the addition of interest after they earn their degrees. Graduate student loans are different from undergraduate student loans in several respects.

Graduate students who take out student loans are only eligible for unsubsidized loans. This means interest begins accruing as soon as the student agrees to the loan terms and while they’re still attending school. Undergraduates may qualify for these types of loans or subsidized loans, which defer interest until after graduation.

Graduate loans are also known for imposing higher interest rates than undergraduate loans. The fixed interest rate for a federal undergraduate loan is 4.53% but 6.08% for a graduate loan. Since graduate school is usually more expensive than undergraduate school, loan amounts are often higher.

Graduate students may also qualify for higher loan amounts since lenders don’t usually take their parents’ income into consideration during the loan qualification process. Most graduate students live independently so family characteristics aren’t used to determine loan terms.

How to Pay for Graduate School

If you don’t qualify for scholarships or grants to pay your tuition, you may need to apply for a graduate student loan. There are two primary types of graduate student loans to consider: federal loans and private loans. Each type of loan has its own qualifications, benefits, and drawbacks.

Federal Loans for Graduate School

Federal student loans are administered by the federal government. To apply, you must complete a Free Application for Federal Student Aid (FAFSA) and submit it to your school’s financial aid office. However, you aren’t required to provide parental information since all graduate students are considered independent.

The government reviews your FAFSA and your school sends you a letter that outlines the federal student loans you qualify for. You may qualify for a Stafford student loan, which is a federal loan that usually offers the most favorable loan terms. The terms you’re provided with depend on your status and cost of attendance. The highest Stafford student loan amount offered is $20,500 for the year and the highest interest rate is 8.25%.

If the amount of your Stafford student loan doesn’t cover your tuition, you may also qualify for a Graduate PLUS loan with the federal government. This loan covers the balance of additional educational expenses you incur after your Stafford loan amount is maxed out.

To qualify for a Graduate PLUS loan, you must pass a credit check. Keep in mind, Graduate PLUS loans are known for imposing high interest rates, so be prepared for high monthly loan payments after you graduate.

Private Loans for Graduate School

In some cases, you won’t qualify for enough in federal graduate student loans to cover your educational expenses, the length of your school attendance, or your living expenses while attending school. If this is the case, you may need to apply for a private student loan.

You may also prefer private student loan terms when compared to federal student loan terms if you have excellent credit and feel confident in your ability to repay the loan. Private loans are offered through private lenders, such as financial institutions.

Each lender enforces its own eligibility requirements, which are usually related to credit history, current debt, and income. The loan terms offered differ by lender but are usually determined by your credit score, borrowing history, and educational expenses.

Should You Take Out Student Loans for Graduate School?

Before you turn to graduate student loans to help pay for tuition, ensure you don’t qualify for grants and scholarships first. You aren’t required to pay back scholarships or grants, so these should be your first choices to pay for educational expenses. If these resources don’t cover all your expenses, you may need to take out a student loan.

Before agreeing to the loan terms offered by the federal government or a private lender, review the interest rate, loan amount, and monthly student loan payments. In most cases, you won’t be responsible for paying the loan back until after graduation but interest begins to accrue even while you’re still in school.

Take the time to shop around your student loan to ensure you find the option that offers the best terms and conditions. If you’re taking on a private student loan, review past reviews of the lender to ensure they provide helpful and fair loan servicing.

Graduate student loans are unsubsidized and may have higher interest rates than undergraduate loans. If you need assistance paying for educational expenses after your scholarship and grant options are exhausted, compare loan terms between federal loans you qualify for and private loans. Ensure you feel comfortable with the monthly payments you’ll be responsible for after graduation before you agree to a loan.

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