The Economics Of Graduate School: Subsidies And Student Support

Graduate students face a different set of financial aid options compared to undergraduate students. While federal subsidized loans were previously available to graduate students, this option was phased out in 2011 by the Budget Control Act, and in 2012 graduate students were no longer eligible for subsidized loans. This type of loan is now only offered to undergraduate students who can demonstrate financial need. However, graduate students can still access other forms of financial aid, including federal unsubsidized loans, graduate PLUS loans, and private loans.

Direct Subsidized Loans are not available for graduate students

Graduate students are no longer able to access Direct Subsidized Loans to fund their studies. This type of loan was discontinued for graduate students in 2011 by the Budget Control Act. Direct Subsidized Loans are now only available to undergraduate students who can demonstrate financial need.

Direct Subsidized Loans are beneficial as they do not accrue interest while the student is enrolled in school at least half-time, during the six-month grace period after leaving school, and during periods of deferment. The responsibility for interest payments falls on the Department of Education during these periods.

However, graduate students are still eligible for other types of financial aid, including federal unsubsidized loans, graduate PLUS loans, and private loans. Federal unsubsidized loans are a viable option for graduate students enrolled at least half-time, despite accruing interest while in school. Graduate PLUS loans also accrue interest while the student is in school, but they can be borrowed up to the school's official cost of attendance, less any other financial aid received. Private loans are another alternative, but they may lack the benefits associated with federal student loans, such as income-driven repayment plans and Public Service Loan Forgiveness.

While Direct Subsidized Loans are not an option for graduate students, there are still several funding sources available to support their educational journey. It is important for graduate students to carefully consider their options and choose the most suitable loan type based on their financial situation and needs.

Direct Unsubsidized Loans are available for graduate students

Graduate students can no longer take out Direct Subsidized Loans, which were discontinued in 2011 by the Budget Control Act. However, Direct Unsubsidized Loans are available to graduate students, although they accrue interest while the student is enrolled.

Direct Unsubsidized Loans are federal loans that do not require students to demonstrate financial need to qualify. The loan amount is determined by the school and can cover the full cost of attendance. Graduate students can borrow up to $20,500 per year and a total of $138,500 in federal loans, including any undergraduate loans.

The interest rate for Direct Unsubsidized Loans for graduate students is set by the federal government annually. For the 2023-2024 academic year, the interest rate for graduate borrowers is 7.05%. This interest rate is fixed for the life of the loan.

While graduate students cannot take out Direct Subsidized Loans, they have other options for funding their education, including federal unsubsidized loans, Grad PLUS Loans, and private loans. It is important to carefully consider the interest rates, fees, and repayment options associated with each loan type before making a decision.

Graduate PLUS Loans are available for graduate students

Graduate students can no longer access subsidised loans. The program that allowed graduate students to receive subsidised loans was ended in 2011 by the Budget Control Act. However, graduate students can access Graduate PLUS Loans.

Graduate PLUS Loans

Graduate PLUS Loans are federal student loans issued by the U.S. Department of Education. They are designed to help graduate and professional students finance their education. They are also known as Direct PLUS Loans and are available to students attending graduate school or professional school.

Requirements

To be eligible for a Graduate PLUS Loan, you must:

• Be enrolled at least part-time at an eligible school in a program leading to a graduate or professional degree or certificate.
• Not have an adverse credit history. This means you have no student loan defaults, no long-term delinquencies, and no bankruptcies on your credit report.
• Meet the general eligibility requirements for federal student aid, including being a U.S. citizen or eligible non-citizen, having a Social Security number, and making satisfactory academic progress.

Applying

To apply for a Grad PLUS Loan, you must first complete the Free Application for Federal Student Aid (FAFSA). Once you've filed the FAFSA, you can start a Grad PLUS Loan application. The application takes about 20 minutes to complete, and you will need to provide your FSA ID, school name, permanent mailing address, U.S. address (if applicable), telephone number, email address, and employer's information (if applicable).

Benefits

Grad PLUS Loans come with a fixed interest rate and flexible loan limits. Loan payments can be postponed while you're in school and enrolled at least part-time, and for an additional six months after you've left school or dropped below part-time status. There are multiple repayment plans available, including income-driven repayment plans, and the interest you pay on the loan can be tax-deductible.

Private student loans are available for graduate students

Graduate students can apply for both federal and private loans. While federal loans are funded by the federal government, private student loans are offered by banks, credit unions, and other private institutions.

When choosing a private student loan, it is important to compare interest rates and whether other factors like your field of study or career choices could impact your borrowing capabilities. It is recommended to check rates from multiple lenders before applying to ensure you get the best rate possible.

• Type of interest rate: variable or fixed
• Credit score and co-signer requirements
• Fees, including application, processing, and late fees
• Degree-specific graduate student loans

Some examples of private lenders that offer student loans for graduate students include:

• Sallie Mae
• College Ave
• Ascent
• Citizens Bank
• EdvestinU
• RISLA
• SoFi

Grants, scholarships, and tuition waivers are available for graduate students

Graduate students can take advantage of various financial aid options to help fund their education. While subsidized federal loans are no longer available to graduate students, other forms of financial assistance are offered by universities, governments, and private organizations. These include grants, scholarships, and tuition waivers.

Grants are a common form of financial aid provided by the federal government, state governments, and private organizations. Unlike loans, grants do not need to be repaid. Grants are usually awarded based on financial need, and students can determine their eligibility by submitting the Free Application for Federal Student Aid (FAFSA).

Scholarships are another option for graduate students. Scholarships are typically awarded for academic merit, achievements, talents, or community involvement. Like grants, scholarships do not need to be repaid. They can be offered by the student's chosen school, state, or private and tribal organizations.

Tuition waivers are a form of financial aid offered by universities that reduce or eliminate tuition fees for students who meet certain requirements. Tuition waivers can be based on factors such as financial need, Native American descent, overcoming hardships, or being a foster child. Additionally, some universities offer tuition waivers for graduate teaching assistants, non-traditional students, veterans, and employees or children of employees. It is important to note that, unlike scholarships and grants, some tuition waivers may be considered taxable income.

Graduate students can explore these options and work with financial aid advisors to determine their eligibility for grants, scholarships, and tuition waivers. By taking advantage of these opportunities, students can reduce their financial burden and focus on their academic pursuits.

Frequently asked questions