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Health & Fitness

Finding The Best Loans For Graduate Study

By Daniel Gerger, President, Adult Education Advocates,

If you are considering pursuing a graduate degree, now is a great time to explore various programs, visit open houses, and compile your transcripts, letters of recommendation and any other records. Applications are generally due in the winter or early spring, although some schools have rolling or staggered admissions.

One of the biggest concerns for adults considering graduate school is figuring out how they will pay for their studies. Financial aid is available for adult students pursuing graduate degrees, and many universities have financial support or merit aid available to adult graduate students. It is a good idea not rule out any program without investigating the typical financial aid packages awarded.

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Whether or not you qualify for a scholarship, all graduate students are eligible for federal student loans. These loans generally have the more favorable rates and terms than the loans from private lenders. To be eligible for a federal loan, you will need to fill out a Free Application for Federal Student Aid (FAFSA), and you can complete that document as early as Jan. 1 for the following fall.

Here is a summary at the most important federal student loan programs open to graduate students:

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Direct Unsubsidized Stafford Loans

These loans are called “Direct” because they are available directly from the U.S. Department of Education for all graduate students, and one of the big advantages of these loans is that you do not have to demonstrate financial need. Also, no credit check is required for a Direct Subsidized Loan . However, you must be enrolled at least half-time to qualify for one on these loans, which typically means for five or six credits during a one-semester term in a graduate program. After filling out your FASFA and gaining admission to a qualified program, your school will determine the amount you can borrow based on the cost of attendance and any other financial aid that you receive.

In 2013-14, the maximum amount that an individual could borrow under this program was $20,500, although students enrolled in certain health profession programs could receive additional loan amounts each academic year. Interest on the loans accumulate while you are enrolled in school, but you have a six-month grace period after graduation before you need to start paying back the loan.

 

Direct PLUS Loans

These loans are available from the U.S. Department of Education for graduate and professional students enrolled at least half-time, and they are generally used in addition to any Direct Unsubsidized Loans to help pay for expenses other aid does not cover. These students must go through a credit check and cannot have an adverse credit history. The amount of loan awarded is determined by the college as part of an overall financial aid package. But generally, the maximum PLUS loan amount is the cost of attendance minus any other financial assistance received. Unlike the Direct Unsubsidized Loans, Direct PLUS Loans do not have a grace period following graduation from graduate or professional school. You need to start making payments on the loans immediately.

Federal Perkins Loans

These loans from the federal government are low-interest loans for undergraduate and graduate students with exceptional financial need. The school you are enrolled in must participate in the Perkins program, and the school determines which of its students receive the funds. The school becomes the lender for this loan, rather than the U.S. Department of Education. For eligible graduate students, the total amount you can borrow through Perkins Loans is up to $8,000 per year.

Remember, private loans for large banks, credit unions and other financial institutions are also available. Most financial aid experts suggest borrowing first through the federal loan programs, and only turning to private lenders when the fund for these other programs are exhausted. Because the federal government backs these loans, the terms and interest rates on the loans tend to be much more favorable than those offered by private banks.

Daniel Gerger is the President of Adult Education Advocates, an organization that helps adults make the transition back to college.  To learn more about financial aid opportunities and applying to college visit our web site.
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