Pros and Cons of Grad School Loans?

Answer 1

If you were not able to secure a fellowship or grant to cover the total cost of your graduate school, consider applying for grad school loans. Grad school loans may not be your first choice of how to pay for your education beyond your bachelor's degree, but they constitute one option that can help fill in gaps in your tuition and living expenses during your grad school years.

Advantages

One of the advantages to grad school loans is being able to not put off going to graduate school. Some undergraduate students feel that if they wait too long after they receive their bachelor's degrees, they will not ever go to graduate school. Grad school loans make it possible for them to attend graduate school right away. Grad school loans also enable students to pay bills their other financial aid does not cover. If a student had poor grades as an undergraduate student or was not able to get a fellowship or grant for some other reason, grad school loans make it possible for them to earn their master's degrees or Ph.D.s.

Disadvantages

Grad school loans also come with some important drawbacks. They are not grants. They must be repaid with interest. As of January 2012, the federal Direct PLUS loan, for which some graduate students are eligible, has an interest rate of 7.9 percent. Private loan rates are typically higher than federal loan rates. Think about your expected earning power when you graduate, the current job market, and the feasibility of repaying your loans within the time period set forth by lenders before you sign any loan promissory note.

Where to Look

When you look for grad school loans, start by first filling out the Free Application for Federal Student Aid, which is available online. The results of this application will tell you whether you are eligible for any federal graduate school grants or loans. The federal government has a few loans available to graduate students and their parents. The amount you may be eligible for in loans depends on your household income, the cost of attendance at the school you wish to attend and other factors. Borrow only as much as is absolutely necessary to attend graduate school.