Because there is very little grant or scholarship money available for graduate courses, most grad students rely on loans.
Luckily, the federal government offers reasonably priced loans to nearly all grad students who are U.S. citizens and attend grad school at least half time.
The federal Stafford loan offers most grad students up to $20,500 a year to cover tuition, fees, books, and other reasonable school costs. Staffords charge an annual interest rate of 6.8 percent, and no more than 1 percent in up-front fees. Medical students can borrow up to $40,500 a year through the Stafford program.
Grad students who need more, and have at least acceptable credit, can borrow the full cost of their attendance—including living and commuting costs—through the federal government's Grad PLUS program.
Grad Plus loans are more expensive than Staffords, charging 7.9 percent a year in interest, plus 4 percent in up-front fees, resulting in a total annual percentage rate of 8.8 percent.
[Read FAQs about Grad PLUS loans.]
Although some private banks advertise lower teaser rates for their private school loans, most financial aid experts recommend students stick with federal loans because of other benefits. Federal loans qualify for Income-Based Repayment, for example, which allows graduates to adjust their payments lower when their paychecks drop.
In addition, federal loans qualify for public service forgiveness, giving teachers, nurses, doctors, and other public servants a chance to escape their federal education debts within 10 years.
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