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Home » Paying for School » Federal Loans

Borrow from Uncle Sam: Federal Graduate Student Loans

federal graduate student loans

You can borrow from the federal government under three different federal student loan programs: Perkins, Direct Unsubsidized, and Direct PLUS. The advantage of federal loans over private loans is that they almost offer lower interest rates and nice features like income-based repayment schemes and deferment. To apply, you'll have to complete the Free Application for Federal Student Aid (FAFSA).

Below, I've put together an overview of the key characteristics of the different federal loans -- take a look to understand the basics. However, the devil is in the details, so if you're serious about a graduate student federal loan ask your school for guidance and visit the government's web site listed below.

* * * Note that federal loan terms are constantly changing, so please consult the Federal Student Aid web site for the latest information * * *


1 The Best of the Bunch: Federal Perkins Loan

This loan carries a ~5% interest rate and the maximum amount you can borrow is $8,000 per year. In practice, this means you can borrow $16,000 for a 2-year master's program or $30,000 for a 5-year doctoral program.

The catch: you must demonstrate financial need.


2 The Middle Brother: Direct Unsubsidized Loan

This loan's interest rate is reset periodically, but as of June 2015 it's 6.21% -- so it's a bit more expensive than the Perkins loan. The amount that you can borrow each year ranges from $5,500 to $20,500 depending on your individual circumstances. At a minimum, it means you can borrow at least $11,000 for a 2-year master's program or $27,500 for a 5-year doctoral program.

No need to demonstrate financial need.


3 The Worst of the Bunch: Direct Plus Loan

This loan's interest rate also resets periodically, but as of June 2015 it's 7.21%. It's the most expensive of the three federal loans available to graduate students, but still probably cheaper than a private loan. The amount that you can borrow is equal to the cost of attendance -- that's to say, you can borrow the full cost of tuition plus living expenses, as estimated by the university. So if tuition is $40,000 per year and the university estimates that you require $20,000 for housing and food, then you can borrow $60,000 every year that you're enrolled.

No need to demonstrate financial need.

 

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