Those looking for student loans for graduate school will find they can choose from either Federal or private lenders. Private loans require the borrower to have a co-signer or good credit and are obtained through resources such as banks and credit unions. Other choices include Federal government loans such as the Stafford and PLUS Loans. In addition to the Stafford and PLUS, students can check with their local campus to determine if there are specific loan programs that are working in conjunction with their selected school. These programs are called “campus based aid” and may include the Federal Perkins Loan, the Federal Supplemental Educational Opportunity Grant and the Federal Work Study. Not every school works with all of these programs so make sure to check with your school.
The PLUS Loans for Graduates and Professional Degree Students or Direct PLUS Loans are similar to the PLUS Loans for parents. The PLUS Loans have a fixed interest rate at 7.9% and require that those applying have a good credit history. The PLUS Loan for Graduates differs from the PLUS Loans for parents in the fact that those applying for the Direct PLUS Loans must also fill out a FAFSA or Free Application for Federal Student Aid. Your school must also determine the maximum eligibility for direct subsidized and unsubsidized Stafford Loans. These loans are provided to eligible students at a low interest rate and will help those pursuing a higher education.
Additionally, those interested in applying for a PLUS Loan, must fill out the Direct PLUS Loan Application and a Master Promissory Note. A Master Promissory Note is a legal document that guarantees the borrower will repay the loan as well as interest and other fees to the United States Department of Education. There are two types of Direct Loans: Subsidized and Unsubsidized. In addition to the PLUS Graduate, Stafford Subsidized and Stafford Unsubsidized Loans, there are also Direct Consolidation Loans.
Subsidized loans ensure that eligible students can receive loans that are interest free for those who attend school at least half of the time. These loans also boast longer deferment and grace periods ensuring that those who are low income and need finances to obtain their degrees have ample time to devote to their studies before needing to repay the loan.
Unsubsidized loans are more common than subsidized as borrowers do not need to prove financial distress in order to qualify. The school you attend will determine how much you qualify for, but it is important to remember that you will be required to pay interest on these loans so ensure that you can afford to repay the loan before taking it out. It’s important to pay the interest on your loan as it accrues otherwise you will end up paying a higher principal.
Direct Consolidation Loans combine multiple Federal loans into one loan allowing the borrower to make one easy payment instead of multiple payments each month. This is beneficial as it reduces the interest rates associated with various loans. It’s important to keep in mind that by consolidating your student loans, it’s possible that you will end up paying more in the long run. Those who have opted to consolidate their student loans may also choose to extend the length of repayment. Those who extend their repayment terms may find that they pay more payments. Though consolidation can lower your monthly payment, you may find that you pay more due to the longer repayment terms, so weigh your options carefully.
Those with question regarding applying for PLUS loans or any other student loans for graduate school should contact their school’s financial aid office. As each loan comes with different terms, rules and maximum limits it’s imperative to work with your school’s financial aid officer to find the best loans for your personal financial situation and educational goals.