How to Pay For Grad School: 4 Best Options for Graduate Student Loans

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Every year, about 3 million students enter graduate school programs, a number that the National Center for Education Statistics expects to rise to nearly 3.3 million by 2026.

Since most of these grad students are financially independent, they have to find ways to cover the costs of higher education.

If you’re heading to grad school, first look for grants and scholarships that you don’t have to repay (in other words, free money). Once you’ve run out of those, you might need to take out student loans to pay tuition.

Your options for graduate student loans are a little different than the ones you had for undergrad. Read on for all your options.

2 federal options for graduate student loans

Just as it does for undergraduates, the Department of Education (DOE) offers federal student loans to grad students. The loan limits tend to be higher, but unfortunately, so are the interest rates. To qualify for these federal graduate student loans, you’ll need to submit the FAFSA first.

Direct Unsubsidized Loans

Just like undergraduate students, grad students can borrow Direct Unsubsidized Loans from the DOE. Since these loans aren’t based on need, you aren’t required to demonstrate financial hardship to qualify. Beyond meeting citizenship requirements, all you really need to do is enroll in school at least half-time.

Your school will decide exactly how much you can borrow in Direct Unsubsidized Loans. That being said, the government sets an annual limit of $20,500 per year and a lifetime limit of $138,500.

As unsubsidized debt, these graduate school loans collect interest from the date they’re disbursed. They all have a fixed interest rate of 6%. Plus, they come with a loan fee of 1.066 percent.

Since these graduate school loans are federal, they’re eligible for federal repayment plans, like income-driven repayment and deferment. Plus, you could qualify for loan forgiveness, depending on your profession.

Grad PLUS Loans

If your Direct Unsubsidized Loans don’t cover the full cost of grad school, you might consider borrowing a Grad PLUS Loan. You can borrow up to the cost of attendance of your school, minus any other aid you’ve already received. As of 2017, 1.1 million borrowers have taken out $56.6 billion in Grad PLUS Loans, according to the Office of Federal Student Aid.

PLUS Loans have a fixed interest rate of 7% and an origination fee of 4.264 percent. Unlike Direct Unsubsidized Loans, PLUS Loans require that the borrower doesn’t have an adverse credit history. If you have low credit, you might need to apply with a creditworthy co-signer.

Beyond submitting the FAFSA, you might have to fill out another application for a PLUS Loan. Your school’s financial aid office will tell you how to apply. Before getting the loan, you’ll also sign a PLUS Loan Master Promissory Note agreeing to all the terms.

You can take out private graduate school loans

Besides federal options for graduate student loans, you can also borrow money from private lenders. Citizens Bank and College Ave, for example, both lend fixed- and variable-rate student loans to people going back to school.

Each private lender sets its own requirements for borrowing a loan. Most look for a steady income and decent credit score. If you don’t qualify, you could try applying with a creditworthy co-signer.

Keep in mind, though, that private lenders aren’t always as flexible as the DOE when it comes to repayment. They typically don’t offer income-driven repayment plans, nor do they grant student loan forgiveness.

Before agreeing to a private loan, make sure you read the fine print about repayment. Use a student loan calculator to anticipate your monthly payments and how much you’ll have to spend on interest. And speak with the lender about your options in case you run into financial hardship later.

Private student loans help many students finance an advanced degree — but you should know what you’re getting into before going too much into debt.

Some colleges have credit unions that grant loans

Finally, it’s worth noting that some universities can hook you up with a low-interest loan from their own credit unions. Harvard has its own credit union, for instance, as does the California State University system.

College-based credit unions tend to have competitive rates and excellent customer service. Speak with your financial aid office to find out whether this option is available to you.

Funding school with graduate student loans

Going back to school for your master’s or Ph.D. is an investment in your education and career. Hopefully, your degree will pay for itself by increasing your earning potential.

But before taking out graduate student loans, consider the return on investment of your graduate degree. Figure out what your student loan repayment will look like and how you’ll manage it.

Furthermore, explore all your options for graduate school student loans. Look for competitive interest rates, flexible repayment terms, or whatever other factors best suit your needs.

With careful planning, you can avoid taking on too much student debt. Then, you can focus on earning your advanced degree and achieving your personal and professional goals.

Need a student loan?

Here are our top student loan lenders of 2019!
LenderVariable APREligibility 
* 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.
** Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

1 Important Disclosures for Earnest.

Earnest Disclosures

  1. Rates include 0.25% Auto Pay Discount
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


2 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

3 Important Disclosures for College Ave.

CollegeAve Disclosures

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.

(1)All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.

Information advertised valid as of 7/1/2019. Variable interest rates may increase after consummation.


4 Important Disclosures for CommonBond.

CommonBond Disclosures

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.
If you are unable to pay your government loan, the government can refer your loan to a collection agency or sue you for the unpaid amount. In addition, the government has special powers to collect the loan, such as taking your tax refund and applying it to your loan balance.

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 you refinance your government loan, your new lender will use the proceeds of your new loan to pay off your government loan. Private student loan lenders do not have to honor any of the benefits that apply to government loans. Because your government loan will be gone after refinancing, you will lose any benefits that apply to that loan. If you are an active-duty service member, your new loan will not be eligible for service member benefits. Most importantly, once you refinance your government loan, you will not able to reinstate your government loan if you become dissatisfied with the terms of your private student loan.

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 are a borrower with a secure job, emergency savings, strong credit and are unlikely to need any of the options available to distressed borrowers of government loans, a refinance of your government loans into a private student loan may be attractive to you. You should consider the costs and benefits of refinancing carefully before 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.


5 Important Disclosures for Discover.

Discover Disclosures

  1. Students who get at least a 3.0 GPA (or equivalent) qualify for a one-time cash reward on each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  2. View Auto Reward Debit Reward Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward.
  3. Aggregate loan limits apply.
  4. Lowest rates shown ARE FOR THE UNDERGRADUATE LOAN AND include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest INTEREST RATE OFFERED ON THE DISCOVER UNDERGRADUATE LOAN and highest interest rates offered on Discover student loans, including Undergraduate, Graduate, Health Professions, Law and MBA Loans. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable Margin percentage. The margin is based on your credit evaluation at the time of application and does not change. For variable interest rate loans, the 3-Month LIBOR is 2.50% as of July 1, 2019. Discover Student Loans will adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Please visit https://www.discover.com/student-loans/interest-rates.html for more information about interest rates.
3.99% – 11.44%1Undergraduate and Graduate

Visit Earnest

3.98% – 11.35%*,2Undergraduate and Graduate

Visit SallieMae

3.96%
11.98%
3
Undergraduate, Graduate, and Parents

Visit College Ave

3.66% – 9.64%4Undergraduate and Graduate

Visit CommonBond

3.87%
11.87%
**,5
Undergraduate and Graduate

Visit Discover

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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