Going to grad school is a big move. You can refine your skills and knowledge, while simultaneously making yourself more employable. But it can also be really expensive. The good news is there are a number of forms of financial assistance out there to help defray the costs, among which are a variety of student loans.
Here’s what you need to know about grad school loans.
Private Versus Federal: What’s the Difference?
Those who are in the process of figuring out how to pay for graduate school might be realizing it’s a bit more complicated than undergrad. There are plenty of federal and private loans out there for individuals looking to further their educations. At the same time though, these loans become a bit more onerous when you get to the graduate level.
Despite there being funding out there for graduate students, many will struggle to find loans that will work for their situation. This can be tricky process, so it’s wise to gain a fundamental understanding of grad school loans. With that in mind, the most basic distinction you’ll have to make is between federal and private graduate loans.
At the simplest level, federal loans are those that come from the federal government, and private loans are extended by a business or lending enterprise. But the functional differences between the two go deeper than that.
For starters, you won’t have to think too hard about interest rates with a federal loan, as they come with a flat rate. This isn’t the case, however, with private loans, which can offer borrowers vastly different terms based on creditworthiness.
One benefit of being in graduate school is borrowers have a higher annual limit they can get through direct unsubsidized loansfrom the federal government—up to $20,500 annually, with an aggregate limit of $138.500 (including what was received during undergrad). The drawback to unsubsidized versus subsidized loans (which are common for undergraduate students) is interest isn’t deferred until after graduation. This means you’ll be accumulating interest on the loan the entire time you’re in school.
There are also Grad PLUS loans, which are federal loans for those who need more money than they can get through other federal programs. This requires a credit check, and sometimes an “endorser,” which is essentially a co-signer.
Private graduate loans can be a good option for those who can’t fulfill their funding needs through the federal programs. Since these come from private lenders, they’re going to have different expectations and requirements than the federal government. Especially for graduate loans, where credit can be more of a factor, you’re going to see a wide variance in offers. It’s a good idea to seek out a service that can help you simplify the process of finding the right private grad school loan.
Juno was created to do just that.
Instead of you having to search around for the best loan from each lender, they do all the work for you. By negotiating the best rate for all their members, Juno can then provide their pool of customers the best deal out there. Their loan offers can even beat those of Grad PLUS in terms of saving money on financing costs.
Does Your Credit Need to Be Good to Get a Grad School Loan?
Generally speaking, you’re going to need to think more about your credit score when applying for graduate loans than undergrad. This is because a graduate school applicant is considered independent, whereas many undergrads are dependents who don’t have much, if any, credit history.
For federal loans, your credit score itself isn’t a dealbreaker, though negative marks on your credit report can give you trouble. This includes things debts in collections, bankruptcy, or other negative credit events. You’ll still be able to qualify, however, with a co-signer.
Private loans can be stricter about credit, as lenders are considering risk profiles in order to ensure they make a profit. If your credit score is under 650, you might want to work on improving it a bit before looking for private grad school loans. Though you might find some offer, the deal probably isn’t going to be that great. Again, using a service to help you find the best loan rates with little or no fees is going to be essential when looking for grad school financing.
There’s lots to think about when applying for graduate school. While financing is probably the last thing you want on your mind, it’s important to know about your various grad school loan options.