Graduate Student Loans

Students are given number of options to borrow money for their studies from federal and private lenders. Graduate student loans are initiated by many Private Graduate Student Loan lenders with more benefits than Federal graduate Loan.

Updated by Deepu M on 22nd May 2019


Graduate student loan borrowed is considered to be an investment for a career. Analyzing and understanding the purpose of this loan can help you finance your education optimally.

When you have exhausted all your savings and other sources to finance your graduate studies, the most recommended way would be looking for federal financial aid. A federal student loan would be a great idea before you look for private graduate student loans.

Here you would get complete information on various options available for a graduate loan.

Choosing the best Graduate loan

If you think graduate student loan is the only option to finance your postgraduate studies before taking any step further, understanding the type of loan is important before you consider the loan. It's also important to know how much loan should be borrowed and steps to apply for it.


Table of contents

Number Topics
1. Features of Graduate student loans
2. Factors to be considered for Best Graduate Student Loans
3. Type of graduate students loans
4. Federal Direct Loan
5. Direct Graduate PLUS loan
6. Private Graduate Student Loan
7. 5 best private graduate loans
8. Conclusion

Features of Graduate student loans

Graduate student loan amount would mainly get influenced by the type of professional field that the borrower is planning to enter. Students must have a number of options to borrow money for their studies, but generally, students are given the option to borrow funds from federal and private lenders. There could be a difference between these lenders but below are the similar features.

1. Repayment with interest

Interest will be charged from the day of disbursement of the loan amount to borrower, he/she has legal obligation to repay back with interest for a number of periods.

2. Availing grace period

Borrowers are provided with a grace period to postpone their repayment soon after they graduate from the course for up to or more than six months, waiting for them to get employment.This grace period would differ with private lenders. Borrowers pursuing professional course like medical, dental and law would be offered with more grace period.

3. Disbursement to borrowers college

Graduate loan requested will be approved and directly disbursed to the college's financial aid office, the student does not get this loan amount with them.


Factors to be considered for Best Graduate Student Loans

Whichever the type of loan a borrower has, he/she must have goals to manage the loans and pay off the loans as early as possible. So borrowers have to borrow loan depending on their priorities. Graduate student loan with a low-interest rate, no fees and with flexible payment options will be the best graduate loan. If a student is looking for the best graduate loan then look for the following features. 

1. Low-interest rate and fees

The amount to be borrowed for a graduate is three times higher than the amount borrowed for undergraduate, as loan amount could be high, the amount paid as interest also will be higher, it can be useful in choosing a lender who lends loan with a lower interest rate, so a borrower could save on total cost. This steps could help borrowers to find low-interest rate lender

2. Look for charges

Always look for application and origination fees with most lenders, as these details aren't openly disclosed as other disclosed details.

3. Attention to advertised rates

Borrowers have to look for advertised rates on a graduate student loan, these advertised rate lender would be best option to borrow, borrowers with a low credit score will get a loan for higher interest rate, this can be avoided by referring to advertised low-interest rate.

4. Collect rate quotes

This can help the lenders to check your credit score and fix the interest rate, as borrowers can compare the interest rate offered by lenders and can choose the best lowest interest rate offered lender to borrow graduate loan.

5. Option in repayment

Another factor to be considered to choose the best graduate loan lender to look for flexibility in the repayment option. Federal and private loan lender would offer borrower to repay the loan with small monthly payment. A lender with the best graduate loan will offer multiple repayment options to borrowers to select any of them as they decide

6. Amount of graduate loan

A lender would look for the maximum amount you require to finance your graduate, a borrower would get loan amount approved on the basis of degree they choose

7. Graduate loan terms

The standard term offered for a graduate loan is 10 years, if still, borrowers look for more flexible terms to shorten or lengthen the term, they have to check the options with different lenders.

The monthly payment would get affected by a graduate loan term. The longer term would bring your monthly payment very less, as a result, you would get to pay more interest amount for the whole life of the loan. Deciding shorter term will increase your monthly payment, ultimately helps you to get debt free as earlier as possible, with paying less interest amount.


Type of graduate students loans

A student can avail a graduate loan in two different ways - Federal and Private.  Federal Student loans are initiated by the Federal Government, where a graduate student can avail his/her graduate loan.

Students can get Federal Direct Loan and Direct Graduate PLUS Loans which are part of federal loan programs, where a student can avail this loan by just filling FAFSA. These loans are offered with a different interest rate, there is also a difference in how to apply for the loans.

These are the types of Federal Loans offered to the students 

  • Federal Direct loan

  • Direct Graduate PLUS loan

Both loans can be availed by filling out FAFSA application. Amount of graduate loan will be determined based on the information you submit. Mostly the size of a loan would get influenced by factors like attendance cost and any other financial aid received by a graduate student.

A program like the Federal Direct Subsidized loan is not provided to a graduate student, as this provides benefit to the student, by paying interest during their school and also in a grace period.


Federal Direct Loan

Federal direct loan help to provide financial assistance to an undergraduate student, graduate student, and parents. This program provides loan assistance to students under Direct subsidized and Direct Unsubsidised loan, It is also known as Stafford loan, in this loan borrower has to pay all periods interest, unlike a Direct Subsidized Loan. Borrowers are provided with loan amount ranging from $20,500 to average of  $ 1,38,500 as Stafford loan. This average loan amount also includes any Stafford loan borrowed as undergraduate.

Features of Federal Direct Loan

1. Interest rate

These loans are given in fixed interest rate, the interest rate will be renewed 1st July of every year according to federal law. Students are provided a loan with an interest rate of 5.31% in the current year.

2. Fees

Stafford loan will be charged with origination fees of 1.069% on the loan amount you borrow. This fee is deducted as instigated by the federal government. As when fees are charged on the disbursed loan amount, received amount will be lesser than the amount you borrowed as a borrower is fully responsible to repay the borrowed amount.

3. Repayment

Borrowers are instructed to start repayment after six months of graduation.

Advantages of Federal Direct Loan

  • Students are offered with comparatively less interest rate than the interest rate charged on a private graduate loan

  • Direct Federal Loan borrowers are given a more flexible repayment option and related benefits than private lenders

  • This loan is given without credit score check, thus there is no need for a cosigner


Direct Graduate PLUS loan

This loan can be availed by both student and parent, the loan amount will be fixed by considering the cost of attendance as mentioned by college and by deducting any other financial aid received by student and finally this net amount will be approved loan. Maintaining the best credit score is must to get qualify for this loan. A loan can be availed only after filing FAFSA.

Features

1. Interest rate

These loans are given in fixed interest rate, the interest rate will be renewed 1st July of every year according to federal law. Students are provided a loan with an interest rate of 6.31% in the current year.

2. Fees

Graduate PLUS Loan will be charged with origination fees of 4.076% on the loan amount you borrow. This fee is deducted as instigated by the federal government. This fees will be deducted on the borrowed amount before it gets transferred to the college.

3. Repayments

Borrowers are instructed to start repayment after six months of graduation if a borrower is a student, if in case of a borrower is a parent then repayment would typically start soon after disbursement of the loan amount.

Advantages of Direct PLUS Loan

  • The loan amount is disbursed for the entire cost of attendance minus any financial aid availed by the student

  • A borrower can avail a loan with the help of a cosigner if the student's credit score is bad

  • Various options in repayment


Private Graduate Student Loan

Private Graduate loan can be avail also from private lenders, it is initiated and funded by banks and credit unions where this loan can be directly requested from private lenders.

If you think graduate student loan is the only option to finance your postgraduate. A student can avail a graduate loan in two different ways Federal and Private, understanding the type of loan is important before you consider the loan. A graduate loan can be availed from private lenders, it is initiated and funded by banks and credit unions, where this loan can be directly requested to private lenders.

Unlike Federal Direct graduate loan, this private lender has a lot more options and offers that borrowers can easily apply for a loan and repay them with flexible repayment options.

Features of Private Graduate Student Loan

1. Interest rate

Private Student Loan lenders offer student loan with two different types of interest rate, in which borrower should decide on their interest rate before the loan gets approved. It's not possible to switch the interest rate type after the loan gets approved, thus borrowers should be aware of the fixed and variable interest rate.

2. Fixed interest rate loan

 If a borrower decides to take a loan with fixed interest, this interest rate will never change for the whole life of the loan. framing fixed interest rate would mainly depend on the lender's decision, market rates and also borrowers credit score.

If the borrower wants to have a long term loan for the expenses, it is better to choose a fixed interest rate, as the borrower will be in a position to repay their loan amount in a long period and the interest rate also would not increase in future.

3. Variable interest rate loan

 Similar to the fixed interest, the variable interest rate would be determined by market rate and borrowers credit score. In choosing a variable interest for a long term loan, this would be a chance to get an interest rate higher or lower in the future.

4. Repayment

Repayment option is different for all borrowers, the Private Student Lender provides between 5 to 20 years under Federal Student Loan the repayment options are more flexible, which has various repayment options.


Benefits of Cosigner

Private Student Loan Lender will approve the loan request if the borrower has a cosigner. Mostly, a cosigner is recommended to be a parent or other relatives, as the cosigner is made responsible for the loan, in case if any default in repayment happens. It means any default in repayment will affect credit score for both the borrower and cosigner. It’s good to be aware of this point.

The borrower must determine the cost, which should include interest rate, origination fee, early repayment fees, and other associated charges. A Private Student Loan can be availed only if a person qualifies by having a good credit score.

Advantages of Private Graduate Loan

  • Borrowers are given a choice among fixed and variable interest rate

  • A graduate loan can be availed by a borrower for any graduate or professional degree

  • Origination fees are not charged

  • There is a flexible repayment option


5 best private graduate loans

Citizens Bank

This bank is known for Multiyear approval, this special feature can help the student to get Private Student Loan approval for all academic year at once, but not insisting the borrower to get approval for each and every academic year. This Bank allows the borrower to choose any option of interest rate, fixed and variable interest for the loan amount for Undergraduate, postgraduate and also to a parent for their children education.

Benefits

  • No application and origination fees

  • It provides a loan term with 5 to 15 years

  • Fixed interest rate range from 6.45 to 12.05 percentage, and its variable interest rate in a range from 6.42 to 12.02 percentage.

  • As any other lender provides a discount rate of 0.25 on auto repayments

  • Helps borrowers to avail loan amount from a range of $5,000 to $350,000

  • Provides discount for loyalty and autopay

  • Helps Students to get a deferment or forbearance period, by postponing the repayments

Discover Student Loans

It is one of the renowned leaders in the US for its credit card network. It is online lender, it was a financial service provider with traditional services, but in recent years it started with providing student loans and refinancing with attractive interest rates. it is famous for not charging loan fees.

Benefits

  • It disburses student loan with both fixed and variable interest rates

  • Its variable interest rate range from 4.12 to 13.12 percentage, and its fixed interest rate range from 5.99 to 13.99 percentage

  • The loan term is disclosed with 15 to 20 years

  • The best part is no application, origination or late fees imposed by this lender

  • It provides a discount of 1% on a new student loan, to a borrower who has 3.0 and good GPA

SoFi

It is one of the leading student loan lenders also refinance the student loan, which has refinanced student loan worth $18 million, which has refinanced to more than 250,000 members. It accepts a request for a student loan, a student who has a credit score of less than 650

Benefits

  • Provides loan to all graduate, postgraduate all professional studies

  • Service like refinancing and parent finance is available

  • Loans are issued with an interest rate in both fixed and variable  

  • The loan term can be chosen from 5 to 20 years

  • There are no application and origination fees

  • Discount is given on auto payment and also additional discount as SoFi Loan Discount

Sallie Mae

Sallie Mae is a renowned student lender in the US market today. This company offers private student loan in both fixed and variable interest rate for undergraduate and postgraduate students. this company also have one of the unique product that no competitors have if a parent want to send their children to private school by using K-12.

Benefits

  • Sallie Mae offers student loans at any variation that exists in the market, as they are quite large

  • Loans can be availed by a student as well as parents for education purposes

  • No application and origination fees

  • No prepayment penalties

  • All process is made easy to apply online and it takes about 15 minutes to apply

  • The variable interest rate for loan ranges from 4.37 to 11.23%

  • The fixed interest rate for loan ranges from 5.74 to 11.85%

  • Advantage of getting cosigner release if a borrower makes 12 on time payment.

MPower

This lender helps students in availing loans in both the USA and Canada for International Students. It allows loan without referring to credit score and collateral. Which also not require a cosigner. It disburses loan based on their academic performance and career plan

Benefits

  • Provides student loan refinancing to international students

  • It offers loan with an only a fixed interest rate

  • Loans with a repayment term of 1 to 10 years

  • Allots loan $2000 to $50000

  • Students get discount on reporting the proof of graduation and employment

  • Discount on-time repayment and also on auto repayment

  • A cosigner is not provided


Conclusion

Graduate students can avail a loan for their education in various ways, but availing loans from Federal Direct Loan, Direct Graduate PLUS Loan, and Private Graduate Loan will be the best option. As they provide various benefits to borrowers in all the way from the initial step of applying to repayment. All the features are borrower-friendly.

A graduate student is expected to analyze and compare various lenders loan options with their benefits for borrowers.


FAQ'S

  What is the best student loan for graduate students?


A graduate student loan can be availed in Federal Direct loan, Direct Graduate PLUS loan and the Private Graduate Loan will be the best option.

  Can Graduate students get subsidized loans?


A Direct Subsidized loan is not available for graduate students but it is provided to an undergraduate student.

  How much financial aid do graduate students get?


Graduate Student Direct Unsubsidized loan is available for a student for up to $20,500 for year

  What is a Graduate PLUS Student Loan?


It is a Federal Loan offered, it is also called as Grad PLUS loan, it lends to a borrower who is pursuing postgraduate or any professional degree with fixed interest rate.

  Can graduate students get financial aid?


To avail any Federal Financial Aid for a graduate student, one has to fill FAFSA application, this is important to receive any Federal Scholarship, Grants and also Graduate loan.

  What is the loan maximum Grad PLUS loan amount?


Borrowers are allowed to get loan amount of $20500 per year in Direct Unsubsidized Loan, but a borrower can get loan amount up to the cost of attendance underGraduate PLUS loan

  What loans are available for graduate students?


A graduate student can avail loans from both Federal and Private lender under the following forms.

  • Stafford loan
  • Graduate plus loan

  What is the difference between Subsidized and Unsubsidized Student Loans?


The main difference between Direct Subsidised Loan and Direct Unsubsidised loan is, where Direct Subsidised Loan is provided to undergraduate student, where federal government pays interest amount for borrowers during student pursuing degree and also deferment period. Where under Direct Unsubsidised Loan, graduate student is not provided with benefits like Direct Subsidised borrowers.

  Can graduate students get grants?


Graduate students are given benefits to get access to grants and scholarships by filling an application with FAFSA.

  Can I get Financial Aid if I already have a bachelor\'s degree?


Students who have already availed Financial Aid during undergraduation, can also avail financial aid in the form of graduate loans under Stafford Loan and Graduate PLUS.