Can You Take Out Subsidized Loans for Graduate School?

Graduate students can't take out subsidized loans for school, but other federal aid is available.

Ryan LaneSeptember 11, 2020
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You can't get subsidized loans for graduate school. You used to be able to take out these loans — for which the government pays the interest while you’re in school — but subsidized loans for grad students were phased out July 1, 2012. Undergraduate students can still get subsidized loans.

Federal unsubsidized loans are available if you're enrolled in graduate school at least half-time. Exhaust these loans first if you need to take out graduate student loans. While unsubsidized loans will cost more than subsidized loans, they're likely still the cheapest option available.

Can you get a parent PLUS loan for graduate school?

Parent PLUS loans aren't available for graduate school. Only parents of undergraduate students can get these loans. Graduate students can take out graduate PLUS loans. These are like parent PLUS loans but in the student’s name, not the parent’s.

Parents who want to help pay for advanced degrees can take out or co-sign private graduate school loans for their children. Private student loans have lower fees than PLUS loans and may come with lower interest rates, depending on your credit history.

But opting for a private loan means forgoing benefits like income-driven repayment and Public Service Loan Forgiveness. Before passing on PLUS loans, consider whether you’ll need those options based on your graduate degree and career path.

How much money can you get for graduate school?

Borrowing limits for graduate students can vary by loan type, as well as by how much money you took out as an undergraduate:

  • Federal subsidized and unsubsidized loans. Graduate students aren't eligible for subsidized loans, but can borrow up to $20,500 a year in federal unsubsidized loans. You cannot receive more than $138,000 in unsubsidized and subsidized loans in total, including any loans you took out as an undergraduate.

  • Federal graduate PLUS loans. There is no specific annual or lifetime dollar limit for grad PLUS loans. You can borrow up to your school's official cost of attendance, minus other aid you’ve received. For example, if your cost of attendance was $70,000 and you got $30,000 via a fellowship and unsubsidized loans, you could take out $40,000 in a grad PLUS loan.

  • Private graduate student loans. How much money you can get will depend on the lender. Many cap your annual borrowing at cost of attendance, similar to grad PLUS loans, but have aggregate lifetime limits. Those amounts may depend on your graduate degree. For example, you can borrow more from Citizens Bank if you're pursuing a professional graduate degree versus an academic one.

How to take out a loan for graduate school

You can apply for federal student loans for graduate school by submitting the Free Application for Federal Student Aid, or FAFSA. Graduate students don't have to include their parents' income information on the FAFSA.

Your school will send you a financial aid award letter based on your FAFSA. Even if that award letter includes a graduate PLUS loan, you’ll still need to submit a separate application to receive this funding.

You must not have an adverse credit history to take out a PLUS loan for graduate school. If you’re ineligible because of your credit, you can appeal this decision or reapply with an eligible endorser. An endorser, like a co-signer, will share responsibility for the PLUS loan. All graduate students can receive unsubsidized loans, regardless of their credit.

If you want to take out a private graduate student loan, apply directly with the lender. You may need a co-signer to qualify.

Which graduate student loan is right for you?

The average student loan debt for graduate school alone is $71,000, according to the latest data from the National Center for Education Statistics. But some students take on much more for advanced degrees; dentists average $292,169 in debt, for example.

Federal loans are usually the best choice when paying for grad school because programs like income-driven plans can help keep payments manageable. However, if you have good credit and are entering a profession with strong earning potential, private loans may cost less in the long run.

Many lenders offer student loans for graduate school. Some also have loan programs for specific professional degrees. Evaluate all your options to get the best deal possible.

Because subsidized loans aren't available for graduate students, interest will accrue if you choose to not make payments while enrolled. If you can put some of your graduate student salary or stipend toward interest-only payments, you can avoid the amount you owe increasing.

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