4 Ways Graduate Student Loans Differ From College Debt
"Graduate students have a leg up on the financial aid process," according to U.S. News & World Report.
"Most are no longer student loan novices. They have perfected the art of filling out the Free Application for Federal Student Aid, know what terms like Expected Family Contribution mean and can recite the differences between subsidized and unsubsidized Stafford loans.
While the process and the terms may be familiar, student loans for graduate students come with their own quirks and nuances. Below are [two] key differences between federal financial aid for grad students and undergrads.
Available aid: Low-income students who qualified for need-based Pell Grants as undergrads will be disappointed to learn those funds are not available at the graduate level. Those students may need to take on debt to pursue a master’s or professional degree.
'On the graduate side there tends to be less subsidy,' says Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators. 'You’re just going to see larger amounts of loans, and potentially some work-study.'
Federal loans available to grad students include unsubsidized Stafford and Graduate PLUS loans. Some students may qualify for a Perkins loan, depending on their financial need, but those funds are scarce.
Students need to pass a credit check to take out a PLUS loan, and those with a bankruptcy, foreclosure or an account in collections may be denied.
Interest rates: 'There’s sort of good news, bad news for graduate students on interest rates,' Draeger says.
The good news: Interest rates on student loans are now tied to the 10-year treasury note, so students will no longer pay above market rate on student loan interest.
The bad news: Graduate students still pay a higher interest rate than undergraduates, and those rates could increase as the market changes.
Grad students are not eligible for subsidized loans, so those higher interest rates start accruing on day one, Draeger says."
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