Dissecting Loan Options When Returning to College


With the average cost of a graduate degree costing between $30,000 and $120,000, finding ways to pay for it are an important aspect of returning to school. While many students may secure scholarships, fellowships, or other forms of free aid, many must turn to loans to fund part of the cost of the advanced degree. There are three key loan options for students to consider.

Federal student loans can contribute to both undergraduate and advanced degrees. The advantage of Federal loans is the federal government backs the loans. They offer a wide range of repayment benefits, give you a fixed rate set by Congress each year, and have generous qualifications making them available to most students. Provided you have kept previous loans in good standing and complete the FASFA form each year, you may qualify for federal aid based on financial need and the annual cost of attendance.

PLUS loans are a form of federal aid designed specifically for graduate students seeking professional degrees or parents of dependent undergraduate students. The lender considers credit, and you must complete the FASFA annually. Congress sets the rate each year, which is higher than other Federal Loans but still offers a low-interest rate.

Private loans, offered by individual banks and credit unions do not offer a uniform rate or terms. Qualification includes a credit check.

Using federal based loans typically provides a lower interest rate and more generous repayment options. Most federal loan options do not require repayment while in school and allow for deferments in the event of unemployment or other financial challenges. You can also enroll in income-based repayment schedules after graduation. Privat loans do not have the full range of benefits that federal loans do, leading experts to recommend that you exhaust federal loan financing before turning to private loans.