What should I know about student and other loans that can help me pay for my graduate degree?
Aug 2, 2011
Financial Aid, MBA
Written by Brian T. Lohr, Director of Admissions, MBA Program, Mendoza College of Business, University of Notre Dame
At most universities, loan opportunities can be broken down into two primary buckets: Federal Loans and Private Loans.
Graduate business students have essentially two options here:
- Federal Direct Subsidized/Unsubsidized Loan
- Federal Direct Graduate Plus Loan
Students must fill out the FAFSA (Free Application for Federal Student Aid) to determine eligibility.
The Federal Direct Subsidized/Unsubsidized Loan (formerly the Stafford Loan) is available in a subsidized (an interest subsidy is paid by the federal government while the student is in school) and unsubsidized (interest payment is made by the student while in school) form.
- Repayment begins six months after the student’s enrollment ends and generally lasts about 10 years.
- Annual borrowing limits are $20,500 with no more than $8,500 coming from the subsidized direct loan.
- Aggregate borrowing limits are $138,500 with no more the $65,500 from the subsidized direct loan.
The Federal Direct Graduate Plus Loan is also available and it is a non-need based loan program that is based on the student’s creditworthiness. Students are encouraged to apply for the full amount needed for the entire school year. Annual loan eligibility is limited by the cost of attendance and other financial aid the student may be receiving.
- Repayment begins 1 month after graduation or when the student drops to less than half time enrollment. Generally, the Direct Graduate Plus Loan has a 10 year repayment term.
- Annual borrowing limits are determined by the student’s demonstrated financial need and other financial aid rewards.
- Aggregate borrowing limits are determined by cost of attendance and other financial aid awards.
After exhausting loan opportunities from federal aid programs, many students turn to private loan programs. Taking on loan debt should be done with a great deal of deliberation and for only the amounts needed. There are three keys to selecting private student loans—research, research, and research! The terms and conditions vary with each individual lender. Your thorough investigation and understanding of these terms and conditions will help to ensure a complete awareness of each program. Consider items such as interest rates, fees (both at the time of borrowing and during repayment), and loan limits when evaluating programs. Oftentimes a credit worthy cosigner can help to lower interest rates.
Many colleges and universities will have a list of lenders that past students have used to fund their educations. As part of the application process, you will be required to complete the Private Education Loan Applicant Self-Certification Form, which is typically provided by the lender and also may be obtained from the Financial Aid Office of each school. You can compare lender discounts and other benefits with College Board Student Loan Comparison Calculator and Loan Discount Analyzer from FinAid.org comparison tools.