Loans to graduate school students when you reach your financial aid limit
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No matter what graduate degree you pursue, there is a good chance that you are dealing with high tuition fees. Low-interest, unsubsidized direct loans can help cover the costs, but there is other financial aid for higher education even if you have reached your direct loan limit.
This limit is $ 20,500 per year in direct unsubsidized consolidation loans. There is also a lifetime direct loan cumulative limit of $ 138,500, including any loans you received as an undergraduate, both subsidized and unsubsidized.
However, some health students may borrow more in the form of direct unsubsidized loans, so you should speak to your financial aid office if this applies to you. You may also be able to take more direct unsubsidized loans if you pay off some of your current loans to bring your debt below the overall limit.
But what if you’ve maximized your student loans for higher education? Here’s how to find other sources of funding, including taking out private loans and getting grants.
Grad PLUS loans are another federal student loan option, but their terms are different from unsubsidized direct loans.
For one thing, there is no specific loan limit: you can borrow up to your school’s tuition fees, minus any other financial aid you’ve already received. Second, Grad PLUS loans have credit requirements. To be eligible, you must submit both the Free Application for Federal Student Aid (FAFSA) and an app showing that you have a voucher credit history. If you have bad credit, you can still get a PLUS loan if you apply to an endorser who has better credit. Or, you can try to document the extenuating circumstances that led to your bad credit history.
As with direct unsubsidized loans, grad PLUS loans come with flexible repayment plans, including extended refund and Income-based reimbursement plans, but their fixed interest rates are higher than those offered on direct unsubsidized loans. PLUS loans also come with higher disbursement fees.
As you explore these different repayment plans, you can check out our student loan repayment calculators for Income-based reimbursement, Reimbursement based on income, Pay as you earn (PAYE) and Review of compensation as you earn (REFUND) scenarios.
|Repayment plan||Eligible loans||Monthly payment and length of repayment term||Eligibility and Benefits|
|Standard repayment plan||All direct loans (including consolidation loans)||Fixed monthly payments guaranteeing repayment of the loan in 10 years (or 10 to 30 years for consolidation loans)||All borrowers are eligible|
|Progressive repayment plan||All direct loans (including consolidation loans)||Payments start out low and increase over time, typically every 2 years. You will repay the loan within 10 years (or 10 to 30 years for consolidation loans)||
All borrowers are eligible
However, low monthly payments at the start means you’ll generally pay more over time.
|Extended repayment plan||All direct loans (including consolidation loans)||Payments are fixed or progressive and the loan is repaid within 25 years||
Borrowers with more than $ 30,000 in direct loans are eligible
Monthly payments lower than standard reimbursement
|Compensation plan as and when revised (REIMBURSEMENT)||All direct loans (including consolidation loans) given to students||Monthly payments represent 10% of your discretionary income. Payments are recalculated each year based on your income and family size.||
Borrowers with an eligible loan are eligible for this plan.
Any outstanding balance on your loan for undergraduate studies will be canceled after 20 years or 25 years for graduate or professional studies. However, you may have to pay tax on the amount handed over.
|Pay as You Earn Plan (PAYE)||All direct loans (including consolidation loans) given to students||Monthly payments are 10% of your discretionary income, but never higher than your standard repayment plan. Payments are recalculated each year based on your income and family size.||
Borrowers who were a new borrower on or after October 1, 2007 and who received a direct loan disbursement on or after October 1, 2011 are eligible.
You must have a high debt-to-income ratio
Your monthly payment will never exceed the amount of the standard 10 year plan.
Any unpaid balance will be forgiven after 20 years
|Income Based Repayment Plan (IBR)||All direct loans (including consolidation loans) given to students||Monthly payments are 10% or 15% of your discretionary income (depending on when you first received the loans). Payments are recalculated each year based on your income and family size.||
Borrowers must have a high debt-to-income ratio
Monthly payments never higher than what you would have paid by standard reimbursement
Any unpaid balance will be forgiven after 20 or 25 years
|Income-Based Repayment Plan (ICR)||All direct loans (including consolidation loans) given to students||The monthly payments will be 20% of your discretionary income or the amount you would pay on a repayment plan with a fixed 12-year payment, adjusted for your income. Payments are recalculated each year based on your income and family size.||
Borrowers with eligible loans can select this plan
Any remaining balance after 25 years can be forgiven
This plan is a great option for borrowers looking for PSLF
|Income sensitive repayment plan||Federal Stafford loans, FFEL loans||Monthly payments are calculated using your annual income. Loans are repaid in full within 15 years.||Only available for FFEL program loans|
You might consider your options for private student loans to see if you can get a lower interest rate, especially if you have good credit. Banks, credit unions, or online student loan companies can be a good source of private student loans if you have good credit and can afford an interest rate at the lower end of the range.
Private lenders examine your credit, income, and debt ratio before they approve you for a loan. If you have high credit or can find a co-signer who does, it’s worth shopping around with multiple lenders so you can find the loan with your lowest possible interest rate.
However, private student loans don’t always have the most flexible repayment plans like income-based repayment like federal loans do. They also generally don’t offer the same protections to borrowers as federal student loans, including deferment and tolerance options.
If you decide that a private student loan is right for you, you can apply online. After filling in your information, the lender will contact your school to certify your information.
You can also shop around to take a look at different offers from private lenders.
Before taking on student debt for graduate studies, you should always look for grants and scholarships, which you don’t have to pay back.
For example, you may be eligible for federal grants, such as the College and Higher Education Teacher Training Assistance Grant (TEACH). It offers up to $ 4,000 per year for students taking courses for a career in teaching, particularly if it is in very demanding fields such as special education, science, mathematics. or foreign languages.
If you’re enrolled in a post-baccalaureate education program, you may even be able to get a Pell Scholarship, which is usually only available to undergraduates. You may also be eligible for a federal work-study program, which may provide part-time employment opportunities if you have financial need.
You should also look at financial aid available in your state or given directly by your school. Outside scholarships and grants offered by companies and professional associations related to your degree program are also a potential option. Your employer may also offer financial assistance for obtaining a graduate degree. Make sure to explore it all resources for graduate scholarships and grants.
You might also want to consider loan forgiveness programs if you are getting into certain eligible fields, especially in the public service field. Discover our complete list of student loan forgiveness programs.
Rebecca Stropoli and Kamaron mcnair contributed to this report.
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