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.
Trea Branch
Ryan Lane
By Ryan Lane and  Trea Branch 
Edited by Des Toups
A female student, wearing round black-frame glasses and a white shirt, rests her chin in her hands

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Subsidized loans — loans that do not accrue interest while in school — used to be available for grad students, but this was phased out July 2012 and is currently only offered to undergraduate students. To pay for grad school, you can explore federal unsubsidized loans, graduate PLUS loans and private loans.

You can take out federal unsubsidized loans if you're enrolled in graduate school at least half-time. Even though these loans accrue interest while you're in school, they are still often the best option compared to grad PLUS and private loans that can have higher fees or interest rates.

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.

If parents still want to help pay for advanced degrees, they 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 both parents and students should think carefully before choosing a private loan. Private loans lack benefits like income-driven repayment and Public Service Loan Forgiveness. Before passing on PLUS loans, consider whether you’ll need those options based on the 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 federal loans in total, including any loans you took out as an undergraduate.

  • Federal graduate PLUS loans. There is no 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 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 borrow will depend on the lender. Many lenders cap your annual borrowing at the cost of attendance, similar to grad PLUS loans, but they may have aggregate lifetime limits. The limit could depend on your graduate degree. For example, you can borrow more from Citizens Bank if you're pursuing a law degree versus a nurse practitioner degree.

Grad students can also qualify for other forms of financial aid for graduate school, including grants, scholarships, fellowships and employer tuition assistance. These are typically funds that you don't have to back, so try to exhaust these options before you borrow.

How to take out federal loans 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.

All graduate students can receive unsubsidized loans regardless of their credit. But it'll be difficult to take out a graduate PLUS loan with an adverse credit history. 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.

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 cost of graduate school was $19,749 for the 2020-2021 academic year, according to the National Center for Education Statistics. But some graduate programs can cost much more. For example, the annual cost of dental school for residents is closer to $52,000 on average, according to the American Dental Association and based on the 2020-2021 academic year.

Federal loans are usually the best choice for covering these costs. 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.

Remember, subsidized loans aren't available for graduate students. Interest will accrue on your unsubsidized loans if you choose not to make payments while enrolled. If you're able to work while in school, putting some of your graduate student salary or stipend toward interest-only payments can keep your student loan balance — and monthly payments — in check.

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