The FSA makes two types of loans available to graduate students through the FAFSA®. Direct Unsubsidized Loans and Direct PLUS Loans. For a given school year, students may receive loans equaling their school’s cost of attendance.
What Are Your Federal Loan Options For Grad School?
Attending graduate school can be expensive. Tuition for master’s programs in the United States can exceed $38,000 a year. Then there are costs for administrative fees, accommodations, food, and textbooks, and school supplies. While financial aid can offset these costs, many graduate students rely on federal student loans called Direct Unsubsidized Loans or Direct PLUS Loans. These are issued by the federal government via the Direct Loans program.
Direct Unsubsidized Loans are the most affordable loan option for graduate students. These loans have a fixed interest rate of 6.28% for the 2021-2022 academic year, and they offer flexible repayment terms. They aren’t need-based like subsidized loans, so your finances won’t determine your eligibility. They are also awarded regardless of your credit history.
Direct PLUS Loans have a higher fixed interest rate of 6.28% for the 2021-2022 academic year. You’ll typically need good credit to qualify. Not all schools participate in the Direct PLUS Loan program, so contact your school’s financial aid office to confirm availability.
What to Consider Before Getting a Federal Loan?
Direct Unsubsidized Loan applicants can borrow up to $20,500 a year, or $40,500 a year if they’re attending medical school. While Direct PLUS Loans provide a maximum of the cost of attending school minus any financial aid, you might not need this much if you have other income.
The greater your loan amount, the higher your repayments will be. Consider carefully how much you need for your study expenses, and apply for a loan to cover only your costs to avoid high repayments.
In most cases you’ll need to repay your federal loan after you graduate or enroll in less than half-time study, even if you don’t complete your education, don’t like the education you received, or struggle to find work. Consider your financial security carefully to determine whether you can make repayments even if things don’t go according to plan.
How to Get a Federal Student Loan for Graduate Study?
As a graduate student, you’ll need to file the Free Application for Federal Student Aid (FAFSA®) before applying for a federal student loan. You can do this online, by completing a paper form, or in person at your graduate school’s financial aid office.
Once your FAFSA® is processed, you’ll get a letter or email from your school’s financial aid office summarizing your available financial aid. This correspondence will help you calculate how much you need to borrow.
Contact your school’s financial aid office to accept the aid and apply for your loan. Read it thoroughly before signing the paperwork, including the Master Promissory Note. Understanding the terms of your federal loan is vital before you sign on the dotted line.
Ask questions about any terms you’re confused about. Once you sign, you’ve committed to repaying your loan according to its terms, whether you understand them or not.
Keep a copy of all your loan documents after you sign your Master Promissory Note. You can refer to these documents if you’re unsure of your terms during the loan period.
When studying a graduate program, consider taking out a federal student loan to ease your immediate financial burden so you can focus on your education.