Your Step-by-Step Guide to Paying for Grad School, Part Two | 03.29.10

Posted in Graduate Loans, Scholarships, Stafford Loan By Student Loan Network Staff

This is the second installment in a three-part blog series on paying for grad school. In case you missed it, here is part one.

Scholarships. These are the best option to paying for school (because they needn’t be paid back), and there are thousands of awards available from coast to coast for prospective graduate students. To start looking, visit and use the search term “graduate”.

Federal loans. You might be surprised to learn that graduate students have many of the same options to borrow money from the federal government as undergraduate students. In some cases, they can be even better. Like before, you must fill out your FAFSA form to determine how much you may receive in subsidized and unsubsidized Stafford loans. One major difference between undergraduate and graduate federal loans is that the annual loan limits are much higher for graduate. The lifetime aggregate Stafford loan limit is $138,500 for graduate students. As long as you are enrolled at least half the time, you are eligible.

Graduate students also have access to federal Graduate PLUS loans. These federal loans have a low, fixed interest rate and are based on your credit rating. The yearly limit on a Grad PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. So if your cost of attendance is $75,000 and you receive $45,000 in financial aid, you may not borrow more than $30,000.

One of the perks of being a grad student is that you have a number of options for repaying your federal loans. Typically, you have ten years to pay off a graduate Stafford loan. You also may opt for a graduated repayment option, which sets your payments low at the start and then gradually increases them as your income increases. The income-sensitive repayment can option can also be useful if your job security is in question, as loan payments in that instance change as your income raises or drops.

Next week: Your private student loan options.

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