Graduate Student Loans

You’re probably still paying off your undergraduate debt, and you’re thinking of going to graduate school. Grad school is expensive. Fortunately, there are loans that can help you pay the tuition.

As with undergraduate student loans, graduate loans fall into two general categories: government loans and private loans. Government loans are usually subsidized and, therefore, cheaper than private loans. The downside is that not everyone qualifies for a subsidized loan.

The best loan available is the Graduate Stafford Student Loan. You can borrow up to $8,500 each academic year. It’s has a low fixed interest rate of 6.8%. If you qualify for a subsidized Stafford loan, you won’t have to start making payment until you’re done with school. Whether or not you qualify for a subsidized loan depends on your financial need.

With an unsubsidized loan, interest starts to amass from the day the loan is disbursed until the day you pay it off. Anyone can get an unsubsidized loan. To apply for a loan, you must complete the Free Application for Federal Student Aid (FAFSA) form.

More often than not, a Stafford loan will not be enough to cover all of your fees. You may need to take out a private loan, as well. Private loans require a credit check. You can go straight to your bank or apply online at ASA Direct (http://www.amsa.com/direct/borrowers/index.cfm). The interest rate on private educational loans depends on your credit rating. If you don’t have much of a credit history, your parents may have to co-sign for the loan.

The government offers its own version of an unsubsidized private loan called the GradPLUS loan. It has a relatively low fixed 8.5% interest rate, and you probably won’t need a co-signer. You will still have to go through a credit check. You can defer payments until you’re done with your studies. The interest, however, will start to accumulate from day one, but on the up-side it is tax deductible.