Paying for Graduate School

Loans for Graduate Students

Higher education can be funded through a variety of resources, including loans for graduate students. For students who exhibit financial need, Perkins Loans are a viable option. Though debt from Perkins Loans can be excused under some specific situations, this debt must be paid back like most other student loans.

The policies of student loans for graduate students are constantly being amended. Types of repayment and consolidation and interest rates and limits are all changing as the federal budget is altered to affect education. To stay informed about these changes, you can visit the website for the U.S. Department of Education.

Perkins Loans offer low fixed interest rates of only 5%, a 9-month grace period opposed to the average 6-month grace period, and low monthly payments of only $40. This loan for graduate students allows students to find stable jobs and to become more financially secure after college before they are forced to repay their loans.

The disadvantage of Perkins Loans is the low borrowing limits. Using Perkins Loans, undergraduate students can borrow up to $5,500 per year with a maximum borrowing limit of $27,500. Graduate students can use Perkins Loans to borrow up to $8,000 per year with a maximum borrowing limit of $60,000, including any money Perkins loans received as undergraduates. For more information about Federal Perkins Loans, you can visit the website for the U.S. Department of Education.

Though most loans for graduate students must be repaid, some loan options have complete or partial forgiveness. For example, the AmeriCorps program is a common choice for students who are looking for debt forgiveness. This program allows students to work in different locations of the United States. Throughout the year in the program, students can earn up to $4,725, which can be applied to paying for education or to paying off debt. Another popular choice for students who are looking for debt forgiveness is the Peace Corps. This program focuses on charity in Third World countries. While students work for Peace Corps, students’ loans are deferred, and 15% of the loan is forgiven for each year in the Peace Corps.


Student Debt Assessment

As the price of higher education has been rapidly increasing, so has the national amount of student debt. Funding student loans has been a recent priority of the government and banks. A law passed in 2007 discouraged private lenders from consolidating student loans, which caused problems for students with debt. Lenders do not want to consolidate debt, but students need to save on interest and to have lower monthly payments. There are now services designed to help students in these situations.

For example, GL Advisor is a financial advisory firm that offers students accurate and free assessments of their student debt. After students provide information about their student loan debt, GL Advisor overviews students’ loan histories and examines specific repayment plans and possible qualifications for federal programs that provide debt relief. After using GL Advisor to assess their debt and to create repayment plans, students can choose to keep GL Advisor for a service fee. GL Advisor will help students create financial plans, assess qualifications for federal aid, refinance student loans and organize tax returns.

Once student debt has been accurately assessed, the next step should be to minimize the overall cost of the debt by applying for loan forgiveness or consolidation. Minimizing the overall cost of the student debt can lower monthly payments, allowing students to save more each month. However, the best way to eliminate debt is forgiveness through service or government programs.


Student Loan Consolidation

The numerous types of student loans are commonly organized into two categories: federal student loans and private loans. Over $60 billion a year is disbursed through federal loans, military compensations, work-study programs, and grants. Federal student loans issued through the U.S. Department of Education are usually simple to consolidate.

Private loans are granted through lending institutions, such as signature loans through Citibank or Sallie Mae. Private loans are often unsecured and have higher interest rates than do federal student loans. Additionally, private loans often begin to accrue interest while students are still in school, but federal loans often do not begin to accrue interest until after graduation.

Students can use federal and private loans along with scholarships and other types of financial aid to fund higher education, but when students want to consolidate their debt, students must consolidate federal and private loads separately. Students should consolidate federal loans first and then private loans. Consolidating loans can lower interest rates and increase repayment terms (the amount of time required to pay off the loan). Student loan consolidation can also eliminate the need to make multiple payments each month on different loans.

Almost half of recent college graduates have accumulated student debt. The average amount of student debt is around $10,000. Interest rates that used to be between 6%–8% have recently fallen to between 3%–4%.

What Are Some Options for Student Loan Consolidation?

Students with loans have several options for student loan consolidation to reduce their debt. Lower interest rates mean that students can consolidate or refinance their loans at a lower cost. However, students should research and compare interest rates before deciding to consolidate their loans.

Taking out excessive amounts of student loans or defaulting on loans reflects poorly on students’ credit scores, which may latter impact students’ abilities to purchase houses, cars, etc. Taking out more than 8% of their incomes in loans can affect students’ abilities to receive loans in the future.

If you are interested in learning how to consolidate student loans, you are not alone! Just remember, there are many ways students can reduce their debt. For example, students can check into debt forgiveness plans offered by their fields, specialties, and careers. Debt forgiveness plans often include services or continued commitments. Reducing monthly payments can also alleviate the burden of student debt by making each payment more manageable. However, students should be aware that adjusting repayment terms can impact their interest rates.

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