Loan options for graduate students
The student loan debt crisis is real. In this guide, prospective graduate students can learn how to utilize student loan options, including repayment plans and loan forgiveness programs, without acquiring exorbitant debt. This section describes the types of graduate student loans, including the interest rates that are generally applied. Stafford loans are supplied to graduate students by the U. These loans are given out on an unsubsidized basis, which means they begin to accrue interest immediately while the borrowers are completing their degree programs.
The interest rates that are applied to Stafford loans depend on when the student borrows money. Inthe federal government passed legislation that sets these student loan interest rates at the same amount as the year Loan options for graduate students note, which can change from year loan options for graduate students year. For example, students who took out loans in the school year had an interest rate set at 5. Also offered by the federal government, Graduate PLUS loans can be borrowed by students who want to use the funds to not only pay their tuition and fees, but also reasonable living expenses.
However, unlike Stafford loan options for graduate students, students who apply for this funding must pass a credit check and can be denied if they have undergone a bankruptcy or have accounts that are in collections. Students with a high financial need may be qualified to take out Perkins loans, which are funded by the federal government and administered through their college or university.
The interest rates of Perkins loans are set at loan options for graduate students percent for the life of the loan, and interest does not begin to accrue until nine months after borrowers have finished their degree programs. Private loans are the funding that students receive from lending institutions outside of the federal government. These loans can be a lot riskier, as their interest rates are variable and can fluctuate throughout the length of the loan.
For example, an institution may offer an interest rate as low as 2. Some private lenders will fix their interest rates, which can amount to rates lower than federal loans in some cases.
These loans can amount to a significant financial obligation, so students must always read the fine print before signing on the dotted line. Department of Education has useful resources that loan options for graduate students help students evaluate the different types of loans. However, depending on your creditworthiness, a private student loan from your bank or credit union may offer competitive interest rates. Be sure to compare the repayment plans and consider the generous deferment, forbearance, and loan forgiveness options that federal loans offer.
Just like education itself, student loans for graduate and undergraduate students are not the same. The following table includes some differences between graduate and undergraduate student loans.
The cap on undergraduate Stafford loans depends on how far students are in their degree programs. The breakdown is currently as follows:. Coralee is a graduate student going to school to become an advanced nurse. As a nurse, Coralee will have the loan options for graduate students to participate in a federal loan forgiveness program.
In exchange for working at a facility affected by the nationwide nursing shortage, her loan will be wiped out after a certain number of payments. Trent is a graduate student studying business. During his research, he found a private lender that offers a fixed interest rate of 2. While the interest rates of federal loans are generally lower than those loan options for graduate students private lenders, in this case, a fixed rate of 2. When students apply loan options for graduate students graduate school, they take painstaking care to ensure that the applications are filled out accurately and completely.
When they apply for student loans, they should be just as diligent. It is important for students to understand when interest will begin loan options for graduate students on their loan, and the interest rate and fees that the lender charges. It is also important for students to routinely monitor their lifetime loans, so they are always aware of how much student debt they accrued.
While many students may dream of winning the lottery and paying off the balance of their student loan in one fell loan options for graduate students, the reality is usually much different.
Loan options for graduate students temporary postponement that graduates can receive if they are unable to make loan payments. Interest continues to accrue during this time.
A temporary postponement that borrowers can receive if they are unemployed, returning to school, suffering from a disability, or serving in the military.
Unsubsidized loans accrue interest during this time, while subsidized loans do not. Students make monthly payments on a regular schedule. Minimum payment loan options for graduate students are calculated based on a year period.
Students make lower payments than those on the regular schedule. Every two years, the minimum payment amount increases.
Students who loan options for graduate students certain jobs in the public sector—including government agencies, the military, and non-profit and public service organizations—may be able to have the balance of their loans forgiven after making payments for 10 years.
After 20 years of successful payments, the loan balance is forgiven. Monthly payments are based on income. Some of the loan may be forgiven after an extended amount of time. Students who have not made payments on their loans for to days, and have not made arrangements with the lender to postpone payments, will have their accounts moved into default status. The consequences of this are serious, and can include being referred to a collections agency, getting sued for the entire loan amount, and having employment wages garnished.
In addition, graduates whose loans are in default may be prohibited from joining the military or renewing professional licenses. Some strategies to prevent defaulting on student loans include borrowing only as much as needed, applying for a forbearance or deferment when a temporary financial hardship arises, and exploring alternative repayment options. Students should only consider loans after exhausting all other resources such as personal savings, school payment plans, employer tuition benefits, and scholarships.
The cost of higher education is an investment in yourself — the more you borrow, the higher the cost, lowering your return on investment. If you have to borrow money, apply the income tax savings, if any, as a lump sum payment toward the principal balance of loan options for graduate students student loan.
First, do your homework. Even before looking at loans, students should research and consider costs at different universities. For example, tuition and fees at online universities vary widely, from approximately the same cost as public universities to more than twice as much. Higher cost does not necessarily mean higher quality, so be sure to understand all of the costs—tuition, books, and fees.
Another factor in your cost consideration should be the length of time you expect to take to complete your degree—the longer it takes, the more it is likely to cost. Some universities, such as WGU, combine a flat-rate tuition with a competency-based model, which allows students to advance as soon as they demonstrate mastery of course materials, making loan options for graduate students possible for many students to accelerate their progress toward a degree, saving both time and money.
If a student needs to take out a loan, it is best to borrow only the amount needed for unmet direct costs tuition and fees after other resources are appliedrather than borrowing the maximum amount allowed. Not understanding the total repayment cost over the life of the loan principal plus interest over 10 or more years. Borrowing the annual maximum. This is a bad idea. Be frugal to optimize your return on investment. Borrow only what you need to cover the unmet direct costs tuition and fees after other resources are applied.
Live within your means and pay your indirect costs living expenses with job wages, savings, and investments. Those in public service fields find their jobs rewarding because they get the opportunity to give back to the community. But there is one reward that they may not be aware of: Under this program, graduates who work for qualified employers on a full-time basis are able to have their loans forgiven after making consecutive payments. Qualified workers are those who are employed by a public service organization approved by the program.
Private not-for-profit organizations that provide services to the public, such as emergency management, law enforcement, education, library, and public health services. For PSLF purposes, full-time employment is defined by whatever the employer considers that status to be, or 30 hours per week, whichever is greater.
Any payments that are made after October 1, loan options for graduate students the full monthly amount on the bill are qualifying payments. In addition, they must be made no later than 15 days after the due date. Only payments made while the borrower is working full-time at the qualified employer will be considered.
However, income does influence the monthly payments that students make if they participate in a qualified payment plan. Therefore, the amount forgiven on the loan is not taxable. After making qualified payments, borrowers must submit a PSLF application form. They must still be working for the qualifying employer in order to have their loan balance forgiven. Graduates can get more information at Studentaid. Graduate students are only eligible for federal loan options for graduate students loans and possibly federal Grad Plus loans which are credit based.
This differs from undergraduate students, who are eligible for possibly federal subsidized loans and other loan programs, such as the Perkins Loan. Other differences include the amount of federal loan limits available. Undergraduate annual limits are lower. Loan options for graduate students a graduate program is a decision that affects students for a lifetime. They should consider the following elements when choosing a program:.
Based on who you are today, what your life situation is, and how much you must have to live and support yourself and your family. Students tend to borrow more than they need for their education. Most students take out the maximum eligibility, even if it is more than the cost of attendance. Students also do not monitor their aggregate loan amounts and are surprised when they graduate how much loan they have and what that means in a monthly payment.
The best way to avoid these mistakes is to plan ahead when enrolling in a program to minimize the amount of loans needed. Also, keep track of the total amount of loans and utilize the tools provided by studentloans.
Graduate students can loan options for graduate students get too much information about funding their education. Learn more about graduate school loans through some of the following resources:. Provides a comprehensive understanding of federal subsidized and unsubsidized loans, including interest rates and repayment schedules. Includes information on entrance and exit counseling, which is designed to give students detailed explanations about student loans and their responsibilities as borrowers.
Students gain an in-depth understanding about the differences between federal and private student loans, and the pros and cons of loan options for graduate students. This site includes a wealth of information on interest rates and loan options for graduate students, including how they are calculated and the effects they have on loan balances.