Alternative Graduate Loans

Graduate students must carefully consider all of their financial aid options before using alternative graduate loans. Grad schools often carry hefty price tags; how you decide to finance your graduate costs can have a great impact on your financial future. Some examples of loan information included in our graduate section include:

Before using alternative graduate loans, maximize these forms of financial aid first:

  1. Graduate Scholarships – Besides scholarship money given to you by the school, look for graduate scholarships in your field of study or at your workplace.
  2. Grants – You may receive state or federal grants that don’t have to be paid back. Graduate students can also apply for grants involving study abroad, academic achievement, or your college major.
  3. Graduate Stafford Loan – This federal student loan is a low-cost option for eligible graduate students, with increased borrowing amounts compared to undergraduate limits. You can borrow up to $20,500 per year in Federal Stafford Loans; $40,500 for certain medical professionals, like doctors. The interest rate on unsubsidized Stafford loans is fixed at 6.8% and the origination fee can be up to 4%.

Once you have maximized free money and federal Stafford loans, and you are still in need of money, consider the federal Grad PLUS loan and alternative graduate loans. Grad PLUS loans require that you do not have adverse (damaged) credit; alternative graduate loans require a more comprehensive review of your credit-worthiness.

Are alternative graduate loans better than Grad PLUS loans?

Alternative graduate loans may have a lower interest rate and fees if you have a good credit history and documentable income. The Grad PLUS interest rate is fixed at 8.5%. You can always apply for alternative graduate loans and see if you can get a better interest rate than the Grad PLUS rate. Remember, that the interest rate on alternative graduate loans is generally variable, so it can change over time.

Another way to increase your chances of getting approved for alternative graduate loans and lowering your interest rate is to apply with a credit-worthy co-signer. Although many graduate students do not want to burden parents or family members with their graduate school debt, it has become much more difficult in this financial environment to get approved for alternative graduate loans. If you cannot find a co-signer or you do not currently have sufficient income, the Grad PLUS loan is probably your best option.

What types of graduate or professional students might need alternative graduate loans?

Any program where the cost of attendance exceeds the Graduate Stafford Loan limit may be in need of Grad PLUS or alternative graduate loans to cover the additional costs. Dental, business, medical, and law schools are some potential examples.