Applying for student loans is much the same at the undergraduate level as it is at the graduate level. Students still need to complete the Free Application for Federal Student Aid (FAFSA). For most undergraduate students this process involves entering their personal and parent’s financial information. At the graduate level, by nature of the student already completing a bachelor’s degree, students only need to include their own financial information. Commonly, graduate students are offered two types of loans:
- Graduate direct student loans up to $20,500 annually at a 4.30% (these numbers change annually in the summer) annual interest rate.
- Graduate PLUS loans up to the Cost of Attendance (COA) minus other aid at a 5.30% interest rate. Unlike direct loans, PLUS loans require a credit check.
Depending on your program and college you may be offered other types of loans. Like loans at the undergraduate, you do not need to make any payments until after you graduate.
Alternatively, students can apply for private student loans. This process involves finding a lender to borrow money from and with factors such as your debt to income ratio (DTI) and credit score determining your credit score. As every lender is different private student loans may not have the same benefits as federal students. That means you might have to make payments before you graduate. Generally, private student loans have higher interest rates.
When it comes to repayment time, federal student loans have a great deal of flexibility. The standard repayment plan is 120 months of equal payments but you can pay less monthly if you qualify for any of the Income-Based Repayment (IBR) or Income-Contingent Repayment (IDR) plans. Though these plans will save you money in the short run, it will result in a longer repayment period and possibly more interest paid in the long run. If you have a little extra money in your budget paying more than the required amount monthly can save you thousands of dollars in interest and a shorter repayment time. The repayment options for private student loans varies by each loan and may not have the same options as federal student loans.
If you’d like to talk to someone about loans or your finances more generally consider setting up an appointment with Scarlet and Gray Financial, a free coaching program through the Student Wellness Center that can help you get the answers to questions you may have.
-Graduate Professional with Scarlet and Gray Financial