Smart Students Guide to Graduate Student Loans Navigating Loan Options, Repayment and Forgiveness for an Advanced Degree

Smart Students Guide to Graduate Student Loans Navigating Loan Options, Repayment and Forgiveness for an Advanced Degree


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The student loan debt crisis is real. Today’s students owe an average loan debt of about $23,000, with graduate students averaging about of $50,000. 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.


Stafford loans are supplied to graduate students by the U.S. Department of Education. 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. In 2013, the federal government passed legislation that sets these student loan interest rates at the same amount as the 10-year Treasury note, which can change from year to year.

For example, students who took out loans in the 2013-2014 school year had an interest rate set at 5.41 percent, which is locked in for the life of the loan.

Graduate students who take out Stafford loans can borrow up to $20,500 annually. Students should keep in mind however that the federal government caps the amount that they can borrow at $138,500 – an amount that includes any funding they may have borrowed during their undergraduate years. Additionally, those studying in certain health fields lifetime loan amount is capped at $224,000.

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 loans, 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. Students are able to borrow $8,000 per year, with a lifetime limit of $40,000, including undergraduate funding.

Smart Students Guide to Graduate Student Loans Navigating Loan Options, Repayment and Forgiveness for an Advanced Degree

The interest rates of Perkins loans are set at 5 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 2.25 percent when the student first borrows the money, but that amount can increase at any time – putting students in a position where they owe much more than they originally bargained for when they began their graduate programs. Some private payday loans Theodore lenders will fix their interest rates, which can amount to rates lower than federal loans in some cases.

When taking out private loans for graduate school, it’s imperative that students understand the terms so they know exactly what they’re signing up for. These loans can amount to a significant financial obligation, so students must always read the fine print before signing on the dotted line.

The U.S. Department of Education has useful resources that can 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.

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