If you plan to attend grad school, you’ll have to figure out how to pay for it. Tuition and fees vary by program and school, but average costs range from around $11,000 to $25,000 a year, according to the Urban Institute.
Scholarships and grants should be your first choice for grad school funding (and there are plenty of opportunities to find free money). But if those options don’t cover your needs, you may have to turn to student loans. If you need to borrow, this four-step guide will teach you all you need to know about how to get student loans for grad school.
1. Estimate the costs of attendance
First things first: You need to figure out how much grad school will actually cost you. It’s not just tuition you have to worry about; you also need to think about room and board, books, transportation costs, and more.
Most graduate schools have helpful charts on their websites that make it easy to estimate the total cost of attendance. These estimates typically include all school-related costs, in addition to general costs of living on and off campus.
Adjust the school’s estimates to apply to your own situation. For example, if you’ll be living at home, you might not need to include the cost of room and board in your final estimate.
Once you’ve got a good idea of what your costs will be, subtract any scholarships, savings, family contributions, income you’ll earn from working, and other sources of funding. This will give you the total amount of money you need to borrow.
2. Compare your options for graduate student loans
Once you know how much you need, you’ll need to figure out where exactly you’ll borrow the money from. When you’re exploring how to get student loans for graduate school, you’ll find you have three primary options:
- Federal Direct Loans
- Grad PLUS Loans from the Department of Education
- Private loans from online lenders, banks, and credit unions
Federal Direct Loans often have the lowest interest and the most flexible repayment terms, so you should borrow the maximum from federal loans first. However, you may not receive enough money from Federal Direct Loans alone, so it’s important to compare other options. The table below gives you a snapshot of each loan’s key features:
|Federal Direct Loans||Grad PLUS Loans||Private Student Loans|
|Maximum Amount You Can Borrow||Annual limit of $20,500. Your school’s financial aid office also imposes limits based on need, which may be lower.||Up to the cost of attendance, minus other financial aid you’ve received.||Varies by lender. Usually up to the cost of tuition, minus other available financial aid.|
|Credit Requirements||There is no credit check, and your credit score doesn’t determine eligibility.||Your eligibility to borrow will be determined based on your credit. You may require a cosigner if you can’t qualify based on your credit score alone.||Your eligibility to borrow is based on credit and income. You may require a cosigner if you can’t qualify based on your credit score alone.|
|Interest Rates||Fixed rate of 6.00% for loans disbursed between 7/1/17 and 7/1/18.||Fixed rate of 7.00% for loans disbursed between 7/1/17 and 7/1/18.||Fixed or variable rates, varies by lender.|
|Origination Fees||1.066% for loans disbursed between 10/1/17 and 10/1/18.||4.4264% for loans between 10/1/17 and 10/1/18.||Varies by lender; many loans have no origination fees.|
|Repayment Terms||Multiple repayment options, including a standard 10-year repayment plan; graduated repayment; and income-driven repayment plans.||Multiple repayment options, including a standard 10-year repayment plan; graduated repayment; and income-driven repayment plans.||Varies by lender. Terms usually range from five to 20 years.|
|In-School Repayment Plans||You do not have to make payments on your loan while in school.||You do not have to make payments on your loan while in school.||Varies by lender. Most allow you to defer payments while in school and for up to six months after, or pay interest only while in school.|
When you compare loan options, consider not only which loan will cost you the least over time, but also which loan options offer the best borrower protections. You can also use the database from the Consumer Financial Protection Bureau to find out if there have been complaints about any private lender you’re considering.
3. Fill out your FAFSA in October
Because Federal Direct Loans are often the most affordable source of funds, it’s important to apply for these loans first. Your eligibility to receive federal loans is determined by your Free Application for Federal Student Aid.
The FAFSA becomes available each year in October. If you’ll be attending school in the 2019-20 academic year, you’d fill out the FAFSA that becomes available in October 2018. You have until June 30, 2020 to complete this form, but federal aid is limited so act as soon as possible. Individual schools and states may also set earlier deadlines by which the FAFSA must be completed, so ensure you meet any deadlines specific to your situation.
When you complete your FAFSA, you’ll provide personal and financial information, including your tax information and details about your savings. Your FAFSA details will be sent to the schools you’re interested in, which will put together a personalized financial aid package and send it to you.
Many schools send financial aid award letters around the same time acceptance letters are sent out. You don’t have to accept all the funding the school offers, but you do need to respond and indicate what types of aid you want to receive.
If you accept federal aid, the funds will be disbursed to the school before the semester begins so your tuition can be paid.
4. Apply for private loans
Figuring out how to get student loans from private lenders can be a bit more complicated, mostly because there are lots of private student loan lenders to choose from. Shop around to see which provider offers you the best interest rate and terms. Consider applying for loans with many different financial institutions including:
- Online lenders: Check out these great private lenders to decide who to submit an application to.
- Local and national banks: Visit the websites of banks you’re interested in doing business with to submit an application.
- Credit unions: Contact credit unions in your area for more information, or use a service such as LendKey, which makes it easy to submit applications to national credit unions and community institutions.
Submitting multiple applications to different lenders is a good idea to comparison shop, but first, check if lenders do a soft or hard credit pull. Most lenders allow you to check rates with a soft credit pull that doesn’t affect your credit. A hard credit pull, however, is posted on your credit report; too many hard inquiries can hurt your credit score.
When you apply for private loans, be prepared to provide:
- Basic personal information, including your name and address.
- Information about the school you’ll be attending and other sources of financial aid available to you.
- Details about your income and assets.
- Information about any cosigner who will be signing for the loans with you.
Many lenders approve or deny an application within a few minutes after submission. The timeline for loan disbursement varies depending upon how quickly your school provides the necessary information to the private lender.
Now you know how to get student loans for grad school
Now you know how to get student loans for grad school so you can secure the funding you need. Just remember not to borrow more than you need, and explore free sources of funds first so you can minimize the amount you’ll have to pay back after graduation.