10 Best Graduate Student Loan Options for 2024

Graduate school is often seen as a necessary step in advancing one’s education and career prospects. However, the rising costs of graduate programs can make it challenging for students to pursue their dreams without financial assistance. This is where graduate student loans come in.

Graduate student loans are specifically designed to help students cover the cost of their education and living expenses while pursuing a postgraduate degree. These loans are offered by both private lenders and the federal government, with varying interest rates, repayment terms, and eligibility requirements.

Types of Graduate Student Loans

There are two main types of graduate student loans: federal loans and private loans.

1. Federal Loans: These are offered by the U.S. Department of Education through its Direct Loan Program. There are three types of federal loans available for graduate students:

  • Direct Unsubsidized Loans
  • Direct Grad PLUS Loans
  • Perkins Loans

2. Private Loans: As the name suggests, private loans are offered by banks, credit unions, and other financial institutions. They are not backed by the government and typically have higher interest rates than federal loans. Private loans may also require a cosigner and have stricter eligibility requirements.

Benefits of Graduate Student Loans

1. Lower Interest Rates: Federal student loans usually have lower interest rates compared to private loans. This can save you thousands of dollars over the life of your loan.

2. Flexible Repayment Options: Federal loans offer various repayment plans, such as income-driven repayment and extended repayment, which can help make your monthly payments more manageable.

3. Deferment and Forbearance Options: Federal loans also offer deferment and forbearance options if you experience financial hardship or unexpected circumstances that make it difficult for you to make your loan payments.

4. No Credit Check (for most federal loans): Most federal student loans do not require a credit check, making them accessible to students with little or no credit history.

Drawbacks of Graduate Student Loans

1. Borrowing Limits: The maximum amount you can borrow from federal student loans is limited, so it may not cover the entire cost of attendance for some graduate programs.

2. Origination Fees: Some federal loans come with orig ination fees, which are a percentage of the loan amount that is deducted from your disbursement. This reduces the amount you receive and increases your overall debt.

3. Interest Accrual: Unlike undergraduate federal loans, graduate student loans accrue interest while you are still in school. This means that your loan balance will be higher when you start repaying it.

4. Credit Check (for private loans): Private loans typically require a credit check, and borrowers with lower credit scores may end up with higher interest rates or not qualify for a loan at all.

Things to Consider Before Taking Out a Graduate Student Loan

  • Your Program’s Cost
  • Your Career Goals
  • Repayment Options
  • Interest Rates
  • Eligibility Requirements
  • Cosigner

Factors to Consider when Choosing a Graduate Student Loan

When considering graduate student loans, it’s important to carefully evaluate your options in order to find the best fit for your unique financial situation. Here are some factors to consider when choosing a graduate student loan:

  • Interest Rates
  • Fixed vs. Variable Interest Rates
  • Repayment Options
  • Loan Forgiveness Programs
  • Loan Limits
  • Fees
  • Credit Requirements
  • Reputation of Lender
  • Customer Service and Support
  • Flexibility

Top 13 Best Graduate Student Loan Options for 2024

As the cost of graduate education continues to rise, many students are turning to loans to fund their studies. With so many loan options available, it can be overwhelming and confusing for graduate students to choose the best option for their specific needs. To help narrow down your choices, we have put together a list of the top 10 best graduate student loan options for 2024.

1. Federal Direct Unsubsidized Loans

Federal Direct Unsubsidized Loans are one of the most common types of loans available to graduate students. These loans are offered by the U.S. Department of Education and do not require a demonstration of financial need.

Eligibility: To be eligible for a Federal Direct Unsubsidized Loan, you must be enrolled at least half-time in a graduate program that is approved by the U.S. Department of Education. You must also be a U.S. citizen or eligible non-citizen with a valid Social Security Number.

Loan Limits: The maximum annual loan limit for Federal Direct Unsubsidized Loans is $20,500 for graduate and professional degree students, with an aggregate limit of $138,500 (including any undergraduate loans). This means that no matter how many years it takes to complete your graduate studies, you cannot borrow more than this amount.

Interest Rates: Unlike subsidized loans, which have interest paid by the government while you are in school and during deferment periods, unsubsidized loans accrue interest from the time they are disbursed until they are fully repaid. For graduate students taking out direct unsubsidized loans between July 1st 2020 and June 30th 2021, the fixed interest rate is set at 4.3%.

Repayment Options: Graduate students can choose from several repayment options for their Federal Direct Unsubsidized Loans including standard repayment (fixed monthly payments over a period of 10 years), graduated repayment (payments start low and increase over time), income-driven repayment (monthly payments based on income and family size), and deferment or forbearance options if you are experiencing financial hardship.

Fees: There is an origination fee associated with Federal Direct Unsubsidized Loans, which is a percentage of the loan amount. For loans disbursed between October 1st 2020 and September 30th 2021, the fee is set at 1.057%.

2. Federal Direct PLUS Loans

Federal Direct PLUS Loans are a type of federal student loan available to graduate students and professional degree students, as well as parents of undergraduate students. These loans are offered by the U.S. Department of Education and come with a fixed interest rate that is determined annually.

One of the biggest advantages of Federal Direct PLUS Loans is that they have no borrowing limit, meaning you can borrow up to the full cost of attendance for your program, minus any other financial aid received. This makes them an attractive option for graduate students who may have higher tuition costs compared to undergraduate programs.

To be eligible for a Federal Direct PLUS Loan, you must meet certain criteria including being enrolled at least half-time in a qualifying graduate or professional degree program, not having an adverse credit history, and completing the Free Application for Federal Student Aid (FAFSA).

Interest Rates and Repayment Options

As mentioned earlier, Federal Direct PLUS Loans come with a fixed interest rate which is determined each year on July 1st. The interest rate for these loans is usually higher than other types of federal student loans, currently sitting at 5.30% for loans disbursed between July 1st, 2020 and June 30th, 2021.

Repayment options for Federal Direct PLUS Loans include standard repayment (fixed monthly payments over a period of 10 years), graduated repayment (payments start low and increase every two years), extended repayment (payments can be extended up to 25 years), and income-contingent repayment (payments are based on your income and family size).

It’s important to note that for graduate students, the standard repayment plan is the only option unless you consolidate your loans or have a total loan balance of over $30,000. If you’re unable to make payments due to financial hardship, you may also qualify for deferment or forbearance.

Application Process

To apply for a Federal Direct PLUS Loan, you’ll need to complete the FAFSA and then submit a separate application specifically for PLUS Loans. This application can be found on the U.S. Department of Education’s website.

You’ll also need to complete an entrance counseling session and sign a Master Promissory Note (MPN) before your loan can be disbursed. The MPN is a legal document that outlines the terms and conditions of your loan.

Pros and Cons

Pros:

  • No borrowing limit: As mentioned earlier, this can be advantageous for graduate students who may have higher tuition costs.
  • Fixed interest rate: This provides stability in knowing how much you’ll owe each month.
  • Flexible repayment options: There are several options available that can fit different financial situations.
  • No prepayment penalty: You can pay off your loan early without any additional fees.
  • Potential for deferment or forbearance: If you experience financial hardship, you may be able to temporarily postpone or reduce your loan payments.

Cons:

  • Higher interest rate: The fixed interest rate for Federal Direct PLUS Loans is usually higher than other types of federal student loans.
  • Credit check required: Unlike other federal student loans that don’t require a credit check, Federal Direct PLUS Loans do. If you have an adverse credit history, you may need a co-signer or be denied the loan.
  • Limited repayment options for graduate students: Graduate students are only eligible for the standard repayment plan unless they consolidate their loans or have a total balance of over $30,000.

3. Federal Perkins Loans

Federal Perkins Loans are a type of federal student loan that is available to both undergraduate and graduate students who demonstrate financial need. These loans are awarded by the school itself, using a limited pool of funds provided by the federal government.

One of the main benefits of Federal Perkins Loans is their low interest rate, which is fixed at 5%. This makes them a more affordable option compared to other types of loans. Additionally, these loans do not accrue interest while the borrower is enrolled in school or during the six-month grace period after graduation.

The maximum amount that can be borrowed through a Federal Perkins Loan for graduate students is $8,000 per academic year, with an overall limit of $60,000 including any undergraduate Perkins Loans. The exact amount awarded will depend on the student’s financial need and the availability of funds at their institution.

Another advantage of Federal Perkins Loans is their generous repayment terms. Borrowers have up to 10 years to repay the loan in full, with no prepayment penalties if they choose to pay it off early. In addition, there may be opportunities for loan forgiveness or cancellation for certain professions such as teaching in low-income schools or working in public service.

To apply for a Federal Perkins Loan, students must first complete and submit the Free Application for Federal Student Aid (FAFSA). The information provided on this application will determine if they qualify for this type of loan. If eligible, they will receive notification from their school regarding how much they can borrow and the next steps to complete the loan process.

It’s important for students to carefully consider their options when taking out Federal Perkins Loans, as they are a form of debt that must be repaid. However, for those who qualify, these loans can provide an affordable way to finance their education.

4. Private Loans from Banks and Credit Unions

Private loans from banks and credit unions are another option for graduate students who need additional funding to cover their education expenses. Unlike federal loans, these private loans are issued by banks and credit unions, which means they have different terms and conditions compared to government-funded loans.

1. Eligibility Criteria:

To be eligible for a private loan, the borrower must have a good credit score and a stable source of income. Some lenders may also require a co-signer with good credit history, especially for graduate students who may not have an established credit yet. It is important to note that each lender has its own eligibility criteria, so it is essential to do research and compare different options before applying.

2. Interest Rates:

Private loans typically have higher interest rates compared to federal student loans as they are based on the borrower’s creditworthiness. The better the borrower’s credit score, the lower the interest rate will be. However, some lenders offer fixed interest rates that remain the same throughout the life of the loan, while others offer variable interest rates that may change over time.

3. Loan Limits:

Unlike federal student loans with set limits based on academic year and dependency status, private loan limits vary depending on the lender’s policies and borrower’s financial profile. Generally, borrowers can borrow up to their cost of attendance minus any other financial aid received.

4. Repayment Options:

Private loans usually offer fewer repayment options compared to federal student loans. Most lenders require borrowers to start repaying their loan immediately after graduation or leaving school. Some lenders may offer deferment or forbearance options, but these vary depending on the lender’s policies.

5. Fees:

Private loans may have origination fees, which are charges for processing the loan. These fees can range from 1-5% of the total loan amount and are usually added to the loan balance.

It is essential to carefully consider all aspects of private loans before borrowing, including interest rates, repayment options, and fees. Borrowers should also compare different lenders and their terms to find the best option for their financial situation.

5. State-Based Loans and Grants

As a graduate student, financing your education can be overwhelming and confusing. Fortunately, there are several options available that can help ease the financial burden of pursuing an advanced degree. One such option is state-based loans and grants.

State-based loans and grants are financial aid programs offered by individual states to assist students in funding their higher education. These programs are typically funded by state governments, making them an attractive choice for students as they often come with lower interest rates and flexible repayment options.

One advantage of state-based loans is that they are specifically tailored to meet the needs of students from a particular state. This means that eligibility criteria, loan limits, interest rates, and other terms may vary depending on the state you reside in or plan to attend graduate school in.

In addition to loans, many states also offer grant programs for graduate students. Unlike loans, grants do not need to be repaid and are awarded based on financial need or academic merit. Some states also have specific grant programs for underrepresented groups such as minorities or women in STEM fields.

To apply for state-based loans and grants, you will typically need to complete the Free Application for Federal Student Aid (FAFSA). This form collects information about your income and assets to determine your eligibility for federal and state financial aid programs.

It’s important to note that each state has its own application process with unique deadlines and requirements. Therefore, it is crucial to research your desired state’s loan and grant programs early on so you don’t miss out on any opportunities.

Overall, state-based loans and grants are excellent options for graduate students looking to finance their education with lower interest rates and more favorable terms. Be sure to explore the options available in your state and apply early to increase your chances of receiving funding.

6. Grad PLUS Loans

Graduate PLUS Loans are also offered by the federal government and have a higher interest rate than Direct Unsubsidized Loans. However, these loans do not have an annual borrowing limit and can cover up to the full cost of attendance minus any other financial aid received.

7. Sallie Mae Smart Option Student Loan

Sallie Mae offers a Smart Option Student Loan specifically designed for graduate students with competitive interest rates and flexible repayment plans. This loan also offers a grace period after graduation before repayment begins.

8. Discover Student Loans

Discover offers private student loans for graduate students with no fees and competitive interest rates. They also offer a variety of repayment options, including deferment while in school.

9. Wells Fargo Graduate Loan

Wells Fargo offers a Graduate Loan with low fixed and variable interest rates, as well as the option to defer payments until after graduation.

10. Citizens Bank Graduate Loan

Citizens Bank offers fixed and variable rate loans for graduate students with no origination fees or prepayment penalties.

11. College Ave Graduate Student Loan

College Ave offers private student loans for graduate students with no application or origination fees and flexible repayment options.

12. Ascent Tuition Cosigned Loan

Ascent offers private student loans for graduate students with competitive interest rates and the option to release the co-signer after making 24 consecutive on-time payments.

13. SoFi Private Student Loans

SoFi offers private student loans for graduate students with competitive interest rates, no fees, and the option to defer payments until after graduation.

Income-Driven Repayment

For graduate students who are struggling to repay their loans, income-driven repayment plans can provide much-needed relief. These plans take into account the borrower’s income and family size to determine a more manageable monthly payment amount.

1) Income-Based Repayment (IBR)

This plan is available for both undergraduate and graduate student loans, with a maximum repayment period of 25 years. In order to qualify for IBR, borrowers must demonstrate partial financial hardship, which means that the calculated monthly payment under this plan must be less than what they would pay under the Standard 10-year Plan. The monthly payment is capped at 15% of the borrower’s discretionary income.

One advantage of IBR is that after making payments for 25 years, any remaining balance will be forgiven. However, this forgiveness may be considered taxable income in some cases.

2) Pay As You Earn (PAYE)

PAYE also has a maximum repayment period of 20 years, with a monthly payment cap of 10% of discretionary income. This plan was created specifically for borrowers who took out loans after October 1, 2007 and have received a disbursement of a Direct Loan on or after October 1, 2011. In order to qualify, borrowers must also demonstrate partial financial hardship.

After making payments for 20 years, any remaining balance will be forgiven under PAYE. One major advantage of this plan is that the forgiven amount is not considered taxable income.

3) Revised Pay As You Earn (REPAYE)

REPAYE is similar to PAYE in that it also has a maximum repayment period of 20 years and a monthly payment cap of 10% of discretionary income. However, REPAYE is available to all federal student loan borrowers, regardless of when they took out their loans or when they received a disbursement.

Like PAYE, any remaining balance after 20 years will be forgiven under REPAYE. Additionally, if the borrower has undergraduate loans, any remaining balance will be forgiven after only 10 years.

4) Income-Contingent Repayment (ICR)

ICR has the longest maximum repayment period of all the income-driven plans at 25 years and has a monthly payment cap of either 20% of discretionary income or what would be paid under a fixed 12-year plan (whichever is less). This plan is available to all federal student loan borrowers.

After making payments for 25 years, any remaining balance will be forgiven under ICR. However, the forgiven amount may be considered taxable income.

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