How Your Student Loan Debt Affects Graduate Education Options Ranger student loan

Graduate enrollments are increasing amid the coronavirus pandemic at a faster rate than last spring. According to recent data from the National Student Clearinghouse Research Center, graduate enrollments are up 4.3% in spring 2021 from 1.5% last spring, while undergraduate enrollment is down.


With so many students returning to higher education for higher education, questions about funding a high school education is increasing.

Paying for higher education can sometimes be more difficult than paying for college, as there are fewer “free money” resources like scholarships and grants available, and borrowing options are somewhat different. In addition, many students who will borrow to pay some or all of the graduate fees will already have student loan undergraduate debt.

If you are considering borrowing for your graduate studies and already have student loan debt, here are a few things to keep in mind:

  • You can meet federal borrowing limits for student loans.
  • You might need Grad PLUS or private student loans.
  • You might have higher monthly payments after graduation.
  • You may want to make payments on college debt while you are in graduate school.

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You could reach federal borrowing limits for student loans

The federal direct loan program has annual and global limits on how much you can borrow in subsidized and unsubsidized student loans. Depending on how much you borrowed for college, the amount you have available for graduate studies may not be enough to cover the costs.

As a graduate student, you may be eligible to borrow up to $ 20,500 per year in direct unsubsidized loans, with an aggregate limit of $ 138,500 which includes all unsubsidized, subsidized, and other federal loans you borrowed to pay for your undergraduate education. Graduate students are not eligible for subsidized loans, but those you have borrowed and still owe as part of undergraduate studies are included in the overall limit.

If your current federal student loan debt reaches the aggregate loan limit, you are not eligible to receive additional federal student loans. Also, if the amount you borrowed is close to the overall limit, the amount you are able to borrow may be less than the annual limit. For example, if you have $ 120,000 in federal student loan debt outstanding with a college, you can only borrow $ 18,500 for your first year of graduate school, even though the annual limit is $ 20,500. . After that, you may not be able to borrow again.

However, if you are able, you can choose to repay a portion of your existing federal student loans to bring the outstanding debt below the overall limit. This would allow you to borrow up to the amount of your remaining eligibility under the aggregate loan limit.

Graduate students and professionals enrolled in certain health professions programs, which have grown in popularity amid the COVID-19 pandemic, should contact their school’s financial aid office about annual and aggregate limits because they may be able to receive additional direct unsubsidized loan amounts each year. .

You may need Grad PLUS or private student loans

If you are reaching the limit for other federal student loans, there are options to explore, including Federal Grad PLUS Loans and Private Student Loans. But keep in mind that they often don’t have the same borrower benefits and repayment plan options as both subsidized and non-federally subsidized student loans, so you will need to think carefully about whether to borrow them.

Unlike federal subsidized and unsubsidized loans, the Grad PLUS loan program does not have a fixed limit. A student can borrow up to the amount of the tuition fee, as determined by the school, less any other financial assistance received.

However, it is important to know that the interest rates for Grad PLUS loans are generally higher than unsubsidized loans, if the latter is still an option and you are trying to choose. The current rate for unsubsidized loans for graduate students is 4.3% versus 5.3% for Grad PLUS loans.

PLUS loans also have higher fees. The current disbursement fee for unsubsidized loans is 1.057% versus 4.228% for PLUS loans.

In addition, your eligibility for a Grad PLUS loan is dependent on a credit check and approval. If you are refused, you may still be eligible by documenting extenuating circumstances related to a problematic credit history, or by obtaining an endorser who does not have an adverse credit history and agrees to repay the loan if you do not repay it. not.

If you are considering Grad PLUS loans, check the interest rates offered by private student loan lenders to see if you can save money over time with a lower interest rate. Private lenders offer rates based on credit history, and if you have a good credit rating, you may receive a better interest rate from any of these lenders than the Grad PLUS option.

The private student loan market includes nonprofit and state lenders, as well as credit unions, banks and other for-profit lenders. Be sure to compare multiple rates and educate yourself about the benefits offered to borrowers by the lender, such as automatic payment discounts.

One thing to keep in mind is that private loans are not eligible for the Federal Public Service Loan Cancellation Program, or PSLF. program.

You might have higher monthly payments after graduation

Some graduate student borrowers with undergraduate student loan debt are surprised when their federal loans are paid off after graduation and their monthly payments have increased significantly.

It’s important to know that each time you borrow more money for your education, you take out a new loan and each loan must be paid off separately. This means that not only are you increasing the total amount of your student debt, but you are also increasing the number of loans that you will have in reimbursement at the same time.

In the case of federal student loans, unless you organize a loan consolidation, each loan is repaid monthly in separate installments that are sent to your student loan officer (s). This is why you may see a big increase in the amount you owe each month after you start paying off your loans.

If your payment amounts are too high to manage, you may want to consider phased or income-focused repayment plans to reduce your total monthly payments, but this may increase the amount you pay over time due to interests.

You may want to make payments on college debt while you are in graduate school

If you have subsidized and non-federally subsidized student loans, you can put them in a carry-over to school while you are enrolled in a qualifying graduate program at least part-time.

As a rule, when these loans are in the process of postponing school, the federal government pays the interest on subsidized loans while you are responsible for the interest that continues to accrue on unsubsidized loans. If you don’t pay interest as it accumulates, the total amount you owe on your existing loans will increase when that interest is added to the principal balance, which is called compounding.

If you have student loan debt, consider doing interest payments only during your graduate studies, if you can. These small payments will allow you to avoid compounding and ensure that your principal loan balance does not increase.

Note, however, that interest is set at 0% until September 2021 on all student loans held by the federal government due to the coronavirus pandemic. The majority of federal student loans are held by the US Department of Education, but some older loans are owned by private entities. If you are unsure whether interest accrual is suspended on your student loans, check with your student loans manager or lender.

About Alma Ackerman

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