Finding A Graduate Student Loan

The graduate student loan (to date) has been typically more difficult to locate than an undergraduate student loan, scholarship or grant.

Undergraduates can typically count on a complex mix of scholarships, grants and loans. Those loans are sometimes taken out by the student alone, others by their parents alone and sometimes a blend of the two such as when the parent becomes a co-borrower or co-signer.

The most common programs for students remain the unsubsidized and subsidized Stafford Loans. Subsidized loans are usually need based and the most desirable, because the government pays the interest while the student is in school. Unsubsidized loans are not need-based so are available to a much wider group of students.

To date there have been very few graduate student loan options as well as limited scholorship and grant monies available just when tuition costs really escalate. Teaching and/or research assistantships usually more than make up the shortfall. Graduates, in effect, have very low-paying (and very long hour) jobs while attending courses and doing their research.

A new option has recently become available in the graduate student loan market: PLUS loans. Though the acronym stands for Parent Loans for Undergraduate Students, they are now an option for many grad students. For undergraduates, the parents are the borrower and responsible for repayment. A Graduate student in the PLUS loan program is the one responsible for repayment.

PLUS Loans Have Several Advantages.

First, they are an available graduate student loan. They're based on credit quality, not need-based, most borrowers can qualify. Relatively few graduate students have had time to get into the credit difficulties that working adults have fallen into. As a result, though their credit history may be sparse, they usually have few bad marks on their credit report. That makes the decision easier for college financial aid officials, who determine eligibility.

Current interest rates for PLUS loans are not low by historical standards. Rates are either 7.9% or 8.5%, depending on the specific type. Even at the lower rate, on $10,000 borrowed the first year interest amount is over $750 and payments start within 60 days of when the funds are disbursed with no grace period.

Caps on graduate and undergraduate student loans, for all non-private loans, differ as well. Even the maximum amount over the lifetime of the program varies between undergraduates and graduates.

  A detailed breakdown of what can be borrowed by who, is available here.

You will need to research all available options for both undergraduates as well as graduates. Keep in mind that, even though it commonly requires a combination of funds from several sources, money to pay for school is now more available than ever. The total funds borrowed last year by all students was over $50 billion. That money is going to someone. It can easily be you.

  Sallie Mae has several graduate student loan options.

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