After I finished my undergraduate degree, I realized that my bachelor’s in communications didn’t help me advance far in my chosen field, or help me earn much money.
After a little research, I found that attending a prestigious school in journalism could help me find higher-paying jobs as a writer. However, I didn’t have the funds to write a check to Syracuse University. Instead, like 53% of grad students, I knew I needed to borrow money, probably starting with Direct student loans.
Here’s how I got the money I needed to pay for graduate school, and how you can, too.
How much federal money can you borrow as a grad student?
Subsidized loans are not available to grad students. But you can borrow up to $20,500 per year using unsubsidized Direct student loans for graduate school. There’s no credit check for a Direct Unsubsidized Loan.
However, you’ll pay a higher interest rate. For loans issued after June 30, 2017, the rate for graduate unsubsidized loans is 6.00%, compared to 4.45% for undergraduate loans.
If you need more than the limit for Direct student loans, you can apply for a Direct PLUS loan. A PLUS Loan does require a credit check, though, and the interest rate is 7.00%. But you can borrow what you need to meet the rest of your school expenses.
Owed to the higher rate on PLUS Loans, If you have good credit, it can make more sense to apply for private student loans to bridge any funding gap.
I maxed out my federal Direct loan amount to pay for a one-year grad program. After receiving a small merit-based scholarship from Syracuse University, I ended up with a gap of about $12,000, which I bridged with a private loan.
Step 1: Get your FSA ID
Begin by getting a Federal Student Aid ID account, if you don’t already have one. While you can complete step two, filling out your Free Application for Federal Student Aid, without an FSA ID, you do need to create one during the application process if you want to sign your application electronically.
If you already have an FSA ID, filling out the FAFSA can be easier, since it automatically fills in some of your information. Chances are that if you took out federal loans in your undergraduate days, you have an FSA ID.
Step 2: Fill out your FAFSA
Before you can get Direct student loans or any other type of federal student aid you need to complete the FAFSA.
You need the following information to fill out your FAFSA:
- Social Security number (or alien registration number if you aren’t a U.S. citizen)
- Federal income tax returns and related records
- If applicable, other financial information such as bank statements, investment records, and untaxed income
During the application process, you need to specify which schools should receive your information. You must request at least one school, but you can direct your application to more than 10 colleges.
In addition to Syracuse, I also sent my FAFSA results to Utah State University. It’s relatively easy to search for eligible schools and add them to your application.
As you can see, there aren’t a lot of steps to filling out your FAFSA. As a grad student, you might not have to worry about parent demographics.
The Department of Education classifies grad students as independent. The main exception to this rule is if you plan to attend law school or enter a medical or nursing program. In some cases, your school might require parental information for its financial aid determinations. But for the most part, you’re likely to skip that.
Once you reach the financial information portion of your application, make it easier on yourself by linking up to the IRS website. It’s easy to use. I was able to import the information in a matter of seconds. Much easier than pulling up your tax return and hunting down the information.
Once you have your financial data squared away, you’ll be required to sign your FAFSA. You have to agree to only use the funds for approved education-related expenses.
If you need help filling out the FAFSA, you’ll find hints throughout the application. Plus, you can save your application and come back to it later. I was able to complete my own graduate FAFSA in about 10 minutes. It’s possible to complete it in even less time.
Step 3: Consider your graduate financial aid package
Using the information you submitted, your chosen graduate schools will put together and send you financial aid packages. In addition to loans, you might be offered a scholarship like I was. You might also be invited to apply for a fellowship or an assistantship in teaching or in research.
The aid package offered by your school might not cover your total cost of attendance. If that happens, you’ll need to look for other funding options. That’s where Grad PLUS Loans and even private student loans can come in.
Figure out your shortfall, and then decide what to do next.
Step 4: Apply for a Direct PLUS Loan
Direct student loans include the PLUS option. A Grad PLUS Loan can cover your funding gap. It’s a way to get extra money for your continuing education if you’ve reached your maximum in other federal programs.
In order to complete a PLUS Loan application, you must have an FSA ID. Some of your application will be prefilled using previously submitted information through your FSA ID.
However, you’ll also need to provide additional information:
- Employer or self-employment information
- Requested loan amount
- Desired loan period
You’ll also have to agree to a credit check and await the decision. If you’re denied, you can obtain an endorser or provide a statement detailing your extenuating circumstances. Afterward, you’ll have to complete PLUS Credit Counseling.
I never applied for a Direct PLUS Loan because the program didn’t exist when I attended grad school. Today, I’d probably opt for a private student loan again because it’s possible for me, based on my credit score, to get a rate of around 4.00%. That low rate could result in significant savings over a PLUS Loan.
When to get a private student loan for grad school
Choosing the best student loans for you requires a bit of research and planning. You’ll always be better off not borrowing money. But you might not have been able to save up enough money for grad school, or maybe you couldn’t get scholarships or grants.
Even if you did nab financial aid, the cost of attending graduate school might still exceed your resources. That’s when you turn to student loans.
It’s a good idea to start with federal Direct student loans. They give you access to income-driven repayment and other protections that might not come with private loans. Plus, if you aren’t sure whether your credit and income will stand up to the scrutiny of private lenders, a federal loan could provide you with the money you need.
It’s important to realize that some private lenders require that you begin repayment in school. With federal loans, you know you have a buffer before you have to start paying the money back. Double-check with a private lender to see if you can wait until you finish school to begin repayment.
Consider your expected income after you graduate, too. If you can get a good interest rate on a private student loan and don’t think you’ll need federal protections based on your income, it’s possible to save money on interest with a private loan.
Once you exhaust that option, it’s time to choose between Direct PLUS Loans and private student loans. If you have good enough credit and a solid income, or you can get an eligible cosigner, it might be a better deal for you to get private student loans.
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 2/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.26% – 13.26%1||Undergraduate and Graduate|
|4.20% – 11.44%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.62% – 11.47%*,4||Undergraduate and Graduate|
|4.38% – 13.38%5||Undergraduate and Graduate|
|5.85% – 6.99%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.47% – 12.34%8||Undergraduate, Graduate, and Parents|