Graduate Loans
Graduate school has become more expensive over the past decade. The average costs of graduate school have increased by more than 35% in the last 10 years. As a result student financial aid or loans have increased tremendously. If you have a Federal Stafford Loan for undergraduate college then you should be familiar with the two types of graduate loans available. You can have subsidized graduate loans and unsubsidized graduate loans.
I have tried to include answers to a lot of the questions that people usually ask about graduate loans. If I have missed something or you have more questions feel free to get in touch with me.
Benefits of Subsidized Graduate Loans
Subsidized graduate Stafford loans are awarded based on financial need. You will not be charged interest before you begin repayment or during periods of deferment. The graduate loans work just like your regular Federal Stafford loans if you are an approved student you do not have to make payments.
The repayment does not begin until you have completed graduate school. This is an enormous benefit because the interest meter is not running and you can concentrate on your classes instead of earning money to pay on your loans. An Unsubsidized graduate loan has the interest meter running as soon as funds are dispersed to your university.
How Much Can I Borrow?
The amount you can borrow is based on the cost of the graduate school less any financial aid you are receiving, your year in school and your status as a student. You may be able to borrow more if you an independent student because you are paying for college yourself. This is something to consider if you plan on attending graduate school. The total maximum you can borrow from Stafford Loans is $138,500 and no more than $65,500 can be subsidized loans. You may not always qualify for this maximum amount due to other financial aid considerations. Contact your financial aid office for more information.
How to Get Graduate Loans?
You will need to complete the Application for Federal Student Aid (FAFSA) or a Renewal FAFSA. This is the same application form you filled out when you were in undergraduate school. Once the FAFSA is processed your school will review the results to see how much you are eligible to receive.
What is the Current Interest Rate?
Graduate loans whether they are subsidized or unsubsidized receive the same fixed 6.8% interest rate through 2013. At that time to rates will be adjusted. Once you have completed graduate school you can look into consolidating all your graduate loans into one payment. When you consolidate your loans you could be eligible for a loan of up to 25 years to repay your loans.
Online Degrees?
Online graduate schools have become very popular with students and universities recently. Many top institutions are now offering online graduate programs. Here is great news for students. Graduate loans are usually eligible for online programs. Attending an online program has two distinct advantages. First of all you can save money since you only need a loan to pay for tuition. Second you can attend a primer graduate school without living in the area. Turn on your computer and you are at class.
Repayment Options for Graduate Loans
The normal repayment plan for a graduate loan is 10 years. You may be able to extend the repayment by deferring the loan or consolidating loans into one loan as I had mentioned earlier.
You have four plans to choose from:
#1 Standard Repayment – requires you to pay a fixed amount each month. The amount you have to pay is at least $50 or the accrued interest. You do not want to pay interest on your interest. Not a good idea.
#2 Graduated Repayment – initially your payment will be lower at first and then the payments increase over time. The amount you have to pay is at least the accrued interest between your scheduled payments.
#3 Income Sensitive Repayment – your monthly payment is based on your yearly income. As your income increases over time your payment is adjusted. This is good option since upon graduation our income is usually low with the potential of pay increases over time.
#4 Extended Repayment – for borrowers of more than $30,000 you are offered a choice of fixed or graduated payments over a period of up to 25 years. This is the typical graduate loan consolidation many students decide to use.
After reading this you can see graduate loans are very similar to undergraduate loans since both offer subsidized and unsubsidized loans to students. Upon completion of graduate school most people will decide to consolidate all their graduate loans into one payment. Consolidating your graduate loans should make your payment more affordable and fit into your budget.