Student loans are a necessary evil for many college students. That’s especially the case if you’re planning to attend graduate school, which is often more expensive than an undergraduate degree on a per-year basis.
What’s more, scholarships aren’t as plentiful for graduate students as they are for undergraduates, and students no longer have access to federal Pell Grants. If you’re thinking about borrowing money to get your graduate degree, it’s important to understand how graduate student loans work and whether they’re worth it.
Here’s what you’ll learn in this article:
- How do graduate student loans work?
- How do you apply for a graduate student loan?
- How much can you borrow in graduate student loans?
- Is getting a graduate student loan worth it?
- What credit score do you need to get a graduate student loan?
U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. The scoring factors for private student loan providers are customer service ratings, fixed APR, variable APR, loan product availability, minimum and maximum loan terms, minimum and maximum loan amounts, minimum FICO score, and online features.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
Find the Best Student Loans for You
Sallie Mae is a publicly traded consumer bank that offers private student loans to pay for undergraduate, graduate and professional degrees, among other educational needs. Congress started Sallie Mae in 1972 as a government-sponsored entity that serviced student loans. The lender went private in 2004 and today provides a range of student loan products. Additionally, Sallie Mae Bank offers savings products and other tools to help families plan and pay for college, including a credit card that earns bonus cash back to help you pay off any student loan.
College Ave exclusively offers student loans. Founded in 2014 and based in Wilmington, Delaware, College Ave offers undergraduate, graduate and parent loans for students enrolled at schools affiliated with College Ave in all 50 states and the District of Columbia. College Ave’s advantage is speed, with applications that take a few minutes to complete and instant decisions.
Earnest is an online lender offering private student loans to college and graduate students, as well as student loan refinancing. The company was founded in 2013. Borrowers can choose their own loan terms to fund up to the full cost of their education.
SoFi is an online lender founded by Stanford business school students in 2011. Originally focused on student loan refinancing, the San Francisco-based company added private student loans in 2019. Choose from undergraduate, graduate, law or MBA, health profession, or parent loans with no fees.
Ascent Funding is an online lender offering undergraduate and graduate student loans for those with or without a co-signer at more than 2,200 eligible schools nationwide. Students who are not U.S. citizens or permanent residents or those with Deferred Action for Childhood Arrivals status – aka “Dreamers” – may apply for an Ascent loan. Ascent Funding was founded in 2015 and is based in San Diego.
LendKey’s digital platform connects borrowers who need private student loans or refinancing loans with credit unions and community banks. Since 2009, LendKey has helped more than 135,000 people by funding $5 billion in loans. The company offers fixed- and variable-rate loans for undergraduate and graduate students.
Citizens Bank was founded in the late 1800s in Rhode Island. Today, it’s one of the largest commercial banks in the U.S. Branches are concentrated in the New England, mid-Atlantic and Midwest regions.
PNC offers student loans in all 50 states for students at all stages of postsecondary education, including professional training loans and refinancing. The bank is also engaged in a number of community efforts, including financial literacy programs and PNC Grow Up Great, which supports early childhood education. For eligible undergraduate students, PNC offers opportunities to win $2,000 scholarships toward education expenses.
Founded in 2014, Purefy is a student loan refinance rate comparison site, and it also originates refinanced student and parent loans via a partnership with Pentagon Federal Credit Union. As a rate comparison tool, Purefy shares interest rates and terms from lending partners, including Earnest, ISL Education Lending and College Ave. This lender review will focus on the loan refinancing options Purefy and PenFed offer together.
Education Loan Finance, also known as ELFI, is a student loan program offered by Tennessee-based SouthEast Bank since 2015. The company provides private student loans and refinancing options for private and federal student loans.
Graduate student loans work similarly to undergraduate student loans, with only a few key differences. For starters, graduate federal loans typically have higher limits, which help students get the financing they need and make up for fewer other financial aid options.
However, these loans also charge higher interest rates than undergraduate loans. For federal student loans disbursed before July 1, 2023, interest rates are 4.99% for undergraduates and 6.54% for grad students.
“Typically, a graduate student will make more money and therefore can pay back at a higher interest rate,” says Joshua Cohen, an attorney who specializes in student loan law.
Federal student loans may be subsidized or unsubsidized, but all graduate loans are unsubsidized.
Graduate student loans from private lenders may have higher interest rates than undergraduate loans from the same lenders.
However, lenders typically offer a range of rates based on your creditworthiness. If you’ve managed to build a credit history by the time you’re a graduate student, you may qualify for a lower rate than what you could’ve gotten on your own as an undergrad.
Despite some of the disadvantages of graduate student loans, graduate students borrow far more than undergraduates to complete their programs.
About 15% of students in higher education were in graduate programs, yet they accounted for 40% of federal student loans issued, according to 2017-18 data analyzed by the Center for American Progress.
Find the Student Loan That’s Right for You
Here are some important factors to compare as you shop around for the best loan for graduate school:
Interest rate. The lower the rate, the greater your savings over the loan term. A low rate can help you secure a low monthly loan payment, pay off a loan faster and save on total interest paid.
Loan amount. Check loan minimums and maximums. Some private lenders may allow you to borrow up to your school’s cost of attendance. Others may have lower limits. Will a single loan cover all of your needs?
Repayment terms. Private student loans may have repayment terms of five to 20 years. Look at the number of repayment choices and their flexibility. Keep in mind that many lenders offer lower interest rates to borrowers who choose shorter terms. Federal loans come with access to several repayment options, including an income-based plan.
Fees. Does the loan have origination fees or other charges that will raise your cost of borrowing? Could you face late or missed payment fees?
Discounts. Private lenders may offer rate discounts for automatic payments or relationship discounts to eligible customers. You might qualify for additional discounts, such as a one-time cash reward for getting a good GPA.
Loan types. What types of loans can you get from this lender? Do you meet the lender’s requirements?
Co-signer requirements. You may need a co-signer to qualify for a private loan. What are the minimum credit score and income requirements for co-signers? How long do you have to wait to release a co-signer from the loan?
The application process for graduate loans depends on whether you’re applying for federal or private student loans.
Graduate students “can generally avoid having to go through the verification process that some undergraduates must complete because they are receiving only non-need-based loans,” says James Anderson, director of financial aid at Montclair State University.
Direct PLUS loans are federal loans reserved for graduate students and parents of undergraduates. If you want to apply for a Direct PLUS Loan, which offers higher limits than the standard graduate loan, you’ll fill out a separate application after you submit the FAFSA on the Federal Student Aid website. Interest rates are also higher for Direct PLUS loans at 7.54%.
With private loans, you’ll submit an application directly with the lender of your choice. Before you do this, get prequalified with multiple lenders to see your estimated rate, compare offers and choose the best fit for you. Prequalification typically uses just a soft credit check, which doesn’t hurt your credit score.
Regardless of where you apply, you’ll typically need to provide some personal information, income and employment information, your school name and other relevant details.
Graduate student loan limits can vary by lender and type of student loan. With direct unsubsidized loans, for instance, you can borrow up to $20,500 per year and $138,500 in total, including undergraduate loans. On the other hand, federal Direct PLUS Loan amounts are limited to the cost of attendance for your school minus other financial assistance you receive.
If you’re thinking of getting private student loans, check with each lender to find out how much you can borrow. Note that private lenders may also have annual and lifetime limits.
For example, you may be able to borrow up to the total cost of attendance for your school every year. Maximums can vary, and you’ll want to contact lenders directly to find out.
There are both benefits and drawbacks to using graduate student loans to help fund your education. As with any financial decision, it’s important to consider the pros and the cons before you pull the trigger:
Loans can help you afford a graduate or professional degree.
You don’t need to make payments until after you leave school.
Loan money can be used to cover educational and living expenses.
Graduate loans carry higher interest rates than undergraduate loans.
Graduates are not guaranteed jobs to pay back their debt.
Student loan payments can delay other important financial goals.
The most important thing to think about may be whether you’ll be able to pay back the debt. “No single school ever gives 100% job placement,” says Cohen. “If they do, I’d be really concerned by that. It helps to be careful about what the real job prospects are.”
Also, remember that borrowing money for graduate school is not entirely necessary, and even if you need to rely on student loans, you may be able to take steps to limit how much you borrow. That may include applying for scholarships and grants, working part or full time, obtaining a fellowship or assistantship, or even saving in advance.
If you’re applying for federal graduate student loans, no minimum credit score is required. In fact, if you apply for direct unsubsidized loans, no credit check is involved in the application process.
Direct PLUS loans do require a credit check, but the Department of Education uses your credit history only to determine if you have significant negative items on your credit report. Examples are bankruptcy, foreclosure, wage garnishment or other things that suggest an adverse credit history.
With private student loans, the credit score requirements can vary by lender. In general, most lenders expect a score in the high 600s to qualify. If your credit score isn’t where it needs to be, or you do qualify but the terms aren’t favorable, a creditworthy co-signer can boost your odds of getting a loan with affordable terms.
If you’re trying to decide between federal and private loans, make sure to look at more than just the interest rates.
“Repayment options, such as with the income-driven repayment, and opportunities for cancellation, such as the Public Service Loan Forgiveness Program, are only available with federal loans,” Anderson says. “Opportunities for discharge, as in the case of the death or disability of the borrower, are also more readily available with federal loans.”
- Scholarships: Check nonprofits, educational institutions and professional associations. Try Fastweb, an extensive scholarship search platform, and Sallie Mae’s interactive tool to find grad school scholarships. But also fill out the FAFSA, which will determine whether you are eligible for need-based scholarships from your school or state.
- Federal work-study programs: Students earn money for school through part- or full-time campus jobs. Fill out the FAFSA to qualify.
- Grants: Complete the FAFSA to be considered for grad school grants. For school-specific grants, check with your school’s financial aid office. You may find grants from nonprofits, government organizations, professional groups and others, but also ask your department head or adviser.
- Employer sponsorship: Some employers offer tuition reimbursement as a benefit, paying for all or part of your education costs. You might have to commit to staying at the company for a certain amount of time after reimbursement.
- Income-share agreement: You receive money to fund your education, and the ISA will take a cut of your income after you graduate.
Sparrow, founded in 2020, is an online marketplace where students and parents can fill out a single application to see whether they qualify for loan offers from a variety of lenders. Although Sparrow is not a lender, the free service allows you to compare rates across lending partners. Sparrow is also available to international students.
Credible is a loan comparison marketplace that allows would-be borrowers to shop around for loans that meet their needs – including mortgages, mortgage refinancing, student loans, student loan refinancing and personal loans. The company was founded in 2013 in San Francisco as a tool to empower borrowers to shop rates and products.
Best for fixed APR
The Rhode Island Student Loan Authority is a nonprofit quasi-state authority that provides college financing to students and parents. The lender specializes in providing loans to Rhode Island residents and students, though not all loans have residency requirements.
Best for no fees
Discover Bank has been operating for more than 100 years, and since 2010, it has offered private student loans to students attending more than 2,400 colleges and universities. Loans of up to 100% of education costs with fixed or variable rates are available.
Best for co-borrowers
The Massachusetts Educational Financing Authority is a state-chartered nonprofit established in 1982 to offer low-cost financing options to college students and their families. You can live anywhere in the U.S. and access Boston-based MEFA’s private student loans, including undergraduate, graduate or refinancing options.
Best for small loan amounts
EDvestinU is the nonprofit student loan lending and refinancing organization of the New Hampshire Higher Education Loan Corp. Undergraduate and graduate loans and student loan consolidation are available to borrowers with both fixed and variable rates available in select states and Puerto Rico.
MPower Financing offers private student loans to undergraduate and graduate students within two years of earning a degree or starting a one- or two-year program at an eligible U.S. or Canadian school. The lender specializes in working with international students and Deferred Action for Childhood Arrivals recipients.
Best for online service
London-based Prodigy Finance offers postgraduate student loans for qualified borrowers from about 150 countries who plan to study as international students at one of more than 850 schools across 18 countries. Students from the United Kingdom can also get loans from Prodigy Finance to study domestically. Since its founding in 2007, Prodigy Finance has provided funding to more than 20,000 students.
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