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3 Options for Graduate School Loans

By U.S. News & World Report

It’s wise to explore student loan options before borrowing to pay for graduate or professional school. Many graduate school students borrow money to finance their education, but with a few options to consider, choosing the right student loan can feel almost as complicated as choosing a program of study.

What’s more, a mainstay of graduate student loans — Direct Graduate PLUS loans — are no longer in the mix starting July 1, 2026.

Students will need a new strategy. “The sunsetting of Direct Graduate PLUS will likely push many students into the consumer marketplace,” says Chris Hanlon, director of financial aid at Lebanon Valley College.

No matter the loan type you choose, you’re not alone if you’re feeling overwhelmed about paying for graduate school. Finding the funds is often more challenging than finding money to pay for undergraduate programs. First, graduate school is usually more expensive. There are also simply fewer “free money” resources like scholarships and grants available to grad students.

This is why many graduate students use student loans to cover at least part of their cost of attendance. Learn more about the three main options for graduate school loans and their terms and conditions.

[Read: Best Student Loans for Graduate School]

A Big Change for 2026

Grad PLUS loans will no longer be an option for new borrowers after July 1, 2026. Historically, the Grad PLUS loan allowed graduate students to borrow up to the full cost of attendance. However, for some borrowers, these loans became problematic because the higher limits made it easier to amass massive amounts of debt, says Ashley Akin, certified public accountant, tax consultant and senior contributor at CEP DC.

On the other hand, not having that option will require a much different strategy moving forward. “Our new ‘fend for oneself’ student and parent borrowing will be very new for everyone involved,” says Hanlon.

3 Options for Graduate School Loans

Student borrowers still have three major options to fund graduate school.

Federal Direct Student Loans

These federal loans are unsubsidized, but come with favorable borrower benefits and protections. The first advantage is that there is no credit check, which makes it easier to qualify.

As for how much you can borrow, beginning July 1, 2026, maximum loan amounts for this program are changing. The annual limit of $20,500 is staying the same, but the new aggregate limit is $100,000 — not including undergraduate loans.

Before, the aggregate limit was $138,500, including undergraduate loans.

If you’re studying in a professional student program, like law or medicine, the annual limit is $50,000 with an aggregate limit of $200,000.

Federal loans offer income-driven repayment plans and Public Service Loan Forgiveness for people who work in certain public jobs. “I always recommend that clients try to use federal loans before private ones,” says Akin. “If your income falls after you graduate and you are struggling to pay the student loans, there are more repayment and forgiveness options available on federal loans.”

Hanlon agrees, noting that even though federal borrowing is often more expensive, consumer benefits are valuable. He lists possible PSLF, deferment and forbearance provisions, and regulatory protections supporting default prevention, school fraud and deceptive sales practices.

Interest rates are set every year and are somewhat higher for graduate students than for undergraduate students. All federal student loans also have an origination fee that is taken off the top of the amount you borrow.

Interest begins accruing as soon as the loan is disbursed, but payment is deferred while you are in school. After you leave school or drop below half-time enrollment, there is a six-month grace period before you are required to begin repayment.

[Read: Best Student Loan Refinance Lenders.]

Private Student Loans: State-Based and Nonprofit Lenders

You can also consider borrowing from a nonprofit or state-based organization. These organizations, which are guided by public-purpose missions, were typically founded solely to help students and families pay for school. The Education Financial Council has a list of available programs by state.

“Some of these have fixed rates in the 3% to 6% range, and also have income-driven repayment plans for students agreeing to work in certain fields or remain in the state after graduation,” says Akin. Most of these loan programs also do not charge origination fees.

If you plan to work in a public service field, you should know that these loan options are not eligible for the federal PSLF program. If you wish to seek loan forgiveness for public service, stick with federal loans.

[Read: Best Private Student Loans.]

Private Student Loans: For-Profit Lenders

Private student loans from banks and other for-profit lenders are also an option for graduate students. “If after full use of direct or loans you still have additional cost — the cost that would have in the past been covered by Federal Direct Graduate PLUS — then take time to shop interest rates (and other terms) with a private student loan provider,” says Hanlon.

Being an informed borrower means getting and comparing quotes from several different lenders to ensure you receive the best deal possible. You should also pay attention to other terms and conditions as they can vary by lender. “Interest rates can also increase if they are variable,” says Akin.

Like with state-based and nonprofit loans, you may be able to save money if you have strong credit and can qualify for the lowest possible interest rates. Be sure to ask whether the lender offers any borrower benefits, like an auto-debit discount, or options that lower or pause your monthly payment in times of financial difficulty.

Note that these loans are not eligible for federal benefits like PSLF.

Is Borrowing for Graduate School a Good Idea?

Graduate programs are expensive. It’s important to understand how much to borrow overall and whether you will be able to manage your monthly payments after graduation — especially if you already have student loan debt from your undergraduate degree.

Consider using a tool like the Education Department’s online Loan Simulator to help you understand whether borrowing is the right decision for you.

“Just because you can borrow a certain amount does not mean you should,” says Akin. “Graduate school can open doors. But smart borrowing will protect your future and help you build wealth instead of just paying off debt.”

More from U.S. News

Private vs. Federal Student Loans: What’s the Difference?

How Existing Student Loan Debt Affects Graduate School Prospects

Is Graduate School Worth the Cost?

3 Options for Graduate School Loans originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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