Graduate Student Loans: What are my Options?

Find out what federal student loans for your masters degree program.

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You’ve searched high and low for scholarships, grants, assistantships, or fellowships to help fund your masters degree program, but still need additional assistance in order to pay for your graduate studies. Your next option is to look at student loans from the federal government.

Due to recent legislature that eliminated the Federal Family Education Loan Program (FFELP), states are no longer able to provide student loans. As of June 20, 2010, the only government entity that can offer student loans is the federal government.

Direct Subsidized Loans are provided to students who demonstrate financial need.

The first step in obtaining federal student aid is to complete the Free Application for Federal Student Aid (FAFSA) either through the internet, or by picking up an application at your graduate school. In order to determine your financial aid package, your school will use the information listed on your FAFSA.

Graduate Student Direct PLUS Loans

The federal government offers Direct PLUS Loans to graduate and professional degree students. A parent who claims a graduate student as a dependent may also apply for a Direct PLUS Loan. The funds provided by the Direct PLUS Loans can be used for educational expenses.

The loan is calculated by your graduate school and is determined by the cost of your attendance minus any other financial assistance you are receiving. Once the amount of your loan is determined, you must sign a Master Promissory Note (MPN), which promises that you will repay according to the terms of your loan.

There is a fixed interest rate of 7.9%. However, if you are a military member who qualifies for the Service Member Civil Relief Act, you may be able to receive a 6% interest rate for the duration of your service.

Repayment for the PLUS Loan begins 60 days after the payment is dispersed. However, if you are attending grad school at least half-time, you are may defer your repayment to after graduation. Depending on the repayment plan you chose, you will have between 10 and 20 years to repay your loan servicer.

Graduate Student Direct Stafford Loans

Direct Stafford Loans are low interest loans provided to graduate students from the US Department of Education at eligible schools. There are two types of Direct Stafford Loans: subsidized and unsubsidized. Unlike the Direct PLUS Loans, there is a maximum amount of money that you may receive from the Direct Stafford Loans each academic year.

Direct Subsidized Loans are provided to students who demonstrate financial need. After consulting your FAFSA results, your graduate school will determine how much money you can receive. Subsidized means that you are not charged interest if you attend school at least half-time.

Direct Unsubsidized Loans are provided to students who do not necessarily have a financial need. Your award amount is determined in the same way as the subsidized loan. However, you must still pay interest while you are in school, or you may allow the interest to accrue while you are in school and have it added to your repayment amount after graduation. The interest rate for graduate students is fixed at 6.8% for both types of Stafford Loans. Depending on the repayment plan that you chose, you will have between 10 and 25 years to repay the terms of your loans.

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