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turning to the authorized money
Graduate students have a leg up on the financial aid procedure.
Most are no more student loan novices. They have perfected the craft of filling out the Free
Application for Federal Student Aid, understand what terms like Expected Family Contribution
mean and can recite the differences between subsidized and unsubsidized Stafford loans.
While the process and the terms may be recognizable, student loans for graduate students come
with their own quirks and nuances. Below are four essential differences between national financial
aid for grad students and undergrads. New Jersey Private Money Lenders
[Explore the Best Graduate Schools Positions .]
1. FAFSA: Put the phone down - you don't need to telephone your parents. Graduate students do
not have to enter mother and father's financial advice on the FAFSA.
"I was mechanically declared independent for my graduate school FAFSA, which means all I
needed to do was submit my personal tax return," says O'Keefe. "I was forthwith given my EFC
and loan qualification amount after completing it, which made it a lot easier to plan."
2. Available aid: Low-income pupils who qualified for need-based Pell Grants as undergrads will
be disappointed to learn those funds are unavailable at the grad level. Those students may have
to take on debt to pursue a master's or professional degree.
"You are merely going to find bigger amounts of loans, and potentially some work study."
Federal loans available to grad students include unsubsidized Stafford and Graduate PLUS loans.
Some pupils may qualify for a Perkins loan, determined by their financial need, but those funds
Students have to pass a credit check to sign up for a PLUS loan, and those who have a
bankruptcy, foreclosure or an account in collections may be denied.
[Learn more about how insolvency affects grad school financing .]
3. Interest rates: "There's sort of good news, bad news for graduate students on interest rates,"
The good thing: Interest rates on student loans are actually tied to the 10-year treasury note, so
pupils will no more pay above market rate on student loan interest.
The awful news: Graduate students however pay a higher interest rate than undergraduates, and
those rates could grow as the marketplace changes.
Grad students are not eligible for subsidized loans, so those higher interest rates begin accruing
on day one, Draeger says.
Pupils who took out loans while earning their bachelor's additionally should consider the rates of
interest on those loans, says Cathy Mueller, executive director of Mapping Your Future, a
nonprofit that helps students plan for school and manage their finances.
While students can postpone loan payments if they return to school, interest will still roll up, says.
"If they are going to be putting those loans on in-school deferment, those loans will continue to
grow due to the interest," she says. "One of the things students may do to minimize the impact is
pay the interest, if they are able to do this."
[Consider five clever strategies to cover grad school .]
4. Borrowing limitations: Undergraduate Stafford loans are limited at $5,500 the first year, $6,500
the second year and $7,500 for any remaining years, up to a maximum of $31,000. Graduate
students, though, can borrow a lot more.
For pupils in particular health fields, those limits are raised to $47,167 per annum, with a lifetime
cap of $224,000.
That is a lot of debt, even for someone entering a money-making profession, Mueller says.
"It may become a burden for students to pay that amount of money b ack," she says. "No matter
whether you're in a high-paying career field or not, it can stifle other alternatives for you." New
Jersey Private Money Lenders
"The student should really be evaluating what their budget is and how much they must take," he
says. "Ultimately, that all has to be repaid with interest."
Graduate PLUS loans enable pupils to get into deeper trouble. But it does not mean they should,
says Draeger, with NASFAA.