If you are hoping to attend college and you have exhausted your grants and scholarships, then graduate school loans are your next best option. However, there is some basic information you need to know before getting graduate student loans. Let’s get into it.
What is a graduate student loan?
A graduate student loan is an amount of money given to you that you are expected to pay back with some interest. You can use this money to pay for tuition, housing, books, fees, accommodation and anything else required for your schooling. Unlike grants, these loans have a higher borrowing limit and hence more perks like a longer deferment period. Also, as per the experts at SoFi Invest, “Now you can use your job offer letter as proof of income when applying for a Graduate Loan.”
Types of Loans Available
The three options for a loan are direct unsubsidized loans, federal grad student loans and private student loans. Each has its own advantages and disadvantages.
Federal Student Loans
These loans are from the US Department of Education and have limits and flexibilities that help the borrower. In this category, people can be able to choose whether they want direct unsubsidized loans or a graduate plus loan.
In a span of one school year, students can get at least $20,500 in DU student loans with a $138,500 aggregate limit. With the grad PLUS loan, students can borrow up to 100% of the amount it costs to attend the course.
- There are flexible options, including allowing people without stable incomes to get their own repayment plans.
- The fixed rates are constant for everyone, with good or poor credit scores notwithstanding
- There are borrower protections, including possible loan waivers or forgiveness.
- There are origination fees
- There might be higher interest rates
- The DU loans have lower loan limits in comparison to other lenders.
Private Student Loans
Private graduate loans are provided by private lenders, including banks, credit unions or even online companies. In this pool, a student has a lot more to choose from, even though each has its own terms and conditions and interest rates. Rates in this field can range from3% all the way to 15% depending on each lender, and most of these use an individual’s credit score to determine whether they will give a loan or not.
Repayment terms have a cap here, ranging from 5 to about 20 years, depending on the amount borrowed and other factors. Some lenders also offer loans for specific degrees such as law, medicine or business. When seeking out private loans, you might want to sit with your specific lender and talk about the terms and conditions before making a decision. Also, take your time to read through the fine print because some of them have hidden clauses that could cost you later.
- Most lenders have zero origination fees
- There are higher loan limits
- There are lower interest rates offered to those with good credit scores
- You can choose between a fixed and variable interest rate depending on your job situation.
- Private loans have no defined hardship plans
- There are no waivers or plans of forgiveness.
- Those with lower credit scores might find it hard to qualify for a loan.
Graduate student loans are a good option if you need to finish college. Hopefully, this information will help you make your decision.