Graduate School Loans – Education is a life-long process, within or beyond the confines of a sprawling college or university campus. You just wish to be in the company of professors and students who share your passion for new knowledge, to listen to daily discourses of new and old ideas that stretch your own imagination to the limits, to write your ideas in endless essays and reports, and to engage in research works in the specific body of knowledge that interest you.
Your objective is no longer confined to earning a college degree and finding work after graduation, but on focusing on specific knowledge that you want to pursue and understand with greater passion and commitment. You want to do it because you want to be an expert in your particular pursuit, to add your voice and expertise to the body knowledge that revolves around your specific passion – be it in business, science, technology, and the arts.
Scribes to Masters
This is the graduate school, where squires trained to be masters, where your knowledge and expertise learned and earned through theoretical frameworks, and practical applications are tested by other experts. You find joy and excitement in the challenge of defending yourself against those who will refute your understanding and question your credibility.
Perhaps what could be more daunting are the costs involved to make your passage into graduate school possible. If you’re confident about what you can do, it’s the expense, not suspense, of your intellectual pursuit that should be bothersome.
Graduate school studies are costly. If you’re like most ordinary American students, you probably finished your undergraduate using federally funded loans and find comfort in the knowledge that more federal loan funds for postgraduate academic endeavors. If you did not default in your previous student obligations and earned high marks in your undergraduate degree, chances are you are qualified to pursue a graduate course using the same funds. Besides, federal loans are still the cheapest in the market with benefits that no private student loan provider can duplicate.
Lately, however, the federal government through the U.S. Department of Education has authorized certain banks and other lending companies to serve more students using more subsidies from the government. However, this is an altogether different story that we will tackle in a separate article. Let’s just say that the government is giving subsidies to some private student lenders, like Sallie Mae, in the form of guarantees against loan defaults by some graduates and recovery of interest. In return, the government can enjoy a large network of support from banks and other financing institutions to help service student accounts.
Shopping for a Student Loan
Applying for a federal student loan for graduate school should be a lot easier for you now, considering that you’ve been probably doing it in the last four years. And if you’re applying for a student loan for the first time, the process is not really that daunting anymore. All you need to do is fill up the FEFSA application available in the internet. If you have no access to the internet, you can pick up a form from your local library.
Circumstances may have already changed for you now, but if you’re taking up graduate studies straight from undergraduate, then you can simply request for additional loan from your existing federal student loan program.
There’s no more need to shop around for student loans like you used to. In the past, you’ve probably experienced meeting too many loan providers, including banks, credit coops, and other loan providers who served as middlemen for federal loans. Since July 2010, the government has streamlined its student lending operations, with the Department of Education dealing directly with the financial aid offices of schools across the United States.
Under this new arrangement, accredited colleges and universities offer graduate students the available financial aids from four federal education student loan program. After FEFSA has processed and approved your application; federal money is funneled to the school, which in turn disburses the funds to you in two equal installments.
Loan funds usually emanate from four popular student loan programs of the government – Perkins, subsidized Stafford, unsubsidized Stafford, and Grad PLUS.
Perkins Loan
Perkins is the most preferred type of loan primarily because it’s the cheapest. However, it’s also the least available and when it’s available, it’s reserved for low-income students.
Being low-income and having all the pertinent documents to support your economic status are not guaranteed that you can be included in this program. But if you can apply sooner to keep your file on the top of the list of applicants, you might just be able to catch the attention of loan evaluators sooner and choose you over the others.
If you’re selected, you’ll have up to $8,000 in loan funds for each year at your disposal. You’re also entitled up $40,000 for the entire program, including your undergraduate debt.
This type of loan carries a low interest rate of 5% with no-interest charges while you’re still studying or in a state of deferral, an integral component of federal loans that you can apply for in case of unemployment or extreme economic hardship.
Moreover, graduates with bad credit can still apply and get an approval for this loan as long they have no history of student loan default.
Subsidized Stafford Loan
The subsidized Stafford loan has the second smallest interest rate in the market, next to Perkins. Its has a fixed interest rate of 6.8% plus a fee of 1% for an effective interest rate of 7.8% for a maximum loanable amount of $8,500 per academic year. Like Perkins, this is also intended for low-income students. As a subsidized loan, interest charges are not added while the student is still in school and when repayment is under deferment. This translates to substantial savings worth thousands of dollars, depending on the amount of your loan.
Since Stafford loans are provided directly by the federal government, through the Department of Education, you can obtain all the money you qualify for in any graduate school of your choice. This type of loan is also available to student debtors with bad credit as long they have no history of defaults.
Unsubsidized Stafford Loans
Unsubsidized Stafford loans have no specific income bracket. Every graduate student who applies for federal loan is entitled to receive this award as long as he’s a U.S. citizen and a legal permanent resident of this country.
This type of loan similarly charges a fixed 7.8% interest rate, which begins when the loan amount is released to the student, even if he or she is still studying. This is why this is called an unsubsidized loan. If you borrow $8,000, for example, from unsubsidized Stafford loan, you could owe $9,000 or more at the end of your course. It’s a good idea; therefore, to start paying the interest component of the loan as soon as it’s billed to ensure that they do not accumulate and become part your principal loan when you graduate.
If you’re approved for unsubsidized Stafford loans, you can borrow up to $20,500 per academic year, or up $138,500, inclusive of your undergraduate loan if you have any. Like Perkins and subsidized Stafford loans; you can avail of unsubsidized Stafford loans even if you have a bad credit record as long as you have not defaulted on previous federal student loans.
Grad PLUS
If your combined Perkins and Stafford loans are not enough to cover your educational costs, including basic living expenses like board/lodging and transportation, then you can turn to Grad PLUS for more help options.
These are a relatively more expensive option and harder to get if you don’t have a good credit history because the application process includes a credit check. The interest rates are relatively high, about 7.9% interest plus 4 percentage points in processing fees. Moreover, interest rates are not covered by the government and are immediately imposed on your loan as soon as it’s released and accrued over the term of your loan.
Investment
Student loans, whether for undergraduate or graduate studies are, in reality, an investment, not an expense, that you should make to advance your career options. The cost of investment could be astronomical and daunting in the onset, but with loans, whether federal or private, it becomes more affordable, less intimidating, and more possible and promising.
Education is the key that can open many doors to new opportunities. Your diploma is your investment bond that can yield a thousand fold more than your original student loan, or rather investment.
More Student Loan Help Sources
- Paying Student Loans
- Student Loan Debt Relief
- Student Loan Consolidation Companies
- Private Student Loan without Cosignor
- FAFSA Student Loans
While some may be able to pursue their professional education without loans, the great number of Americans needs to fill up that FAFSA form, submit all the requirements it needs, and works around the loan programs awarded to them.
It could be a combination of Perkins and Stafford, a mix between Perkins, Stafford, and GradPLUS, but in the classroom and in the grand scheme of life, you’re all equal in one boat sailing in one ocean of opportunities.
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