Your College Planning Specialists

As a potential graduate student, you will want to consider the different types of loans available to you and what the differences are between each.

The type of loan you choose to take out will depend on your financial need and circumstances.

Counselors, advisors, and college planning specialists can offer advice and resources to ensure you make the right choice.

Regardless of the type of loan you apply for, you’ll want to apply early, assess benefits, and compare and negotiate.

Applying for graduate school and receiving funding for it can be challenging. That is why the College Benefits Research Group is here to help you with your educational journey.

Read on to learn more about federal graduate student loans, private graduate student loans, how to choose the right loan, and where to find professional college planning specialists.

What are federal graduate student loans?

Federal student loans are loans the federal government provides to help graduate students pay for their education.

These loans are part of the William D. Ford Federal Direct Loan Program, which is the largest federal student loan program in the United States.

There are two types of federal graduate student loans.

Federal Direct Unsubsidized Loans

These loans are available to graduate students who are enrolled at least half-time and do not require students to demonstrate financial need.

Students can borrow up to $20,500 per academic year, and interest starts accruing on the loan as soon as it is disbursed.

Students are responsible for paying the interest while in school, or they can choose to defer the interest payments and have them added to the loan balance.

Federal Direct Graduate PLUS Loans

These loans are available to graduate students and professional students who need to borrow more than the maximum amount offered by the Direct Unsubsidized Loan.

Students can borrow up to the full cost of attendance minus any other financial aid they receive.

PLUS loans require a credit check, and interest rates are higher than those for Direct Unsubsidized loans.

Both types of federal student graduate loans offer flexible repayment options.

These may include income-driven repayment plans that cap monthly payments at a percentage of the borrower’s income and deferment and forbearance options.

It’s essential to carefully consider your options and understand the terms and conditions of any loans before borrowing.

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Private graduate student loans

A private graduate student loan is a loan offered by a private lender, such as a bank, credit union, or online lender, to graduate and professional students who need to borrow money to pay for their education.

Private graduate student loans differ from federal loans and may offer more terms and conditions than federal loans. These loans are typically based on the borrower’s creditworthiness and may require a co-signer.

The interest rates on private loans may be fixed or variable and may be higher than those on federal loans.

Private loans may also have different repayment options than federal loans, such as variable repayment terms or the ability to make interest-only payments while in school.

Private graduate student loans may be a good option for students who have exhausted their federal loan options or who need to borrow more than the federal loan limits.

However, it’s important to carefully compare the terms and conditions of private loans before borrowing and only borrow what you need to cover your education expenses.

What are the main differences between loans?

There are various differences between federal student loans and private graduate student loans. Read on to learn which loan may be best for you.

Source of funding

Federal student loans are provided by the U.S. Department of Education, while private lenders, such as credit unions or private institutions, offer private student loans.


Federal student loans are available to most students who meet basic eligibility criteria, regardless of their credit score or financial situation.

Private student loans, on the other hand, may have stricter eligibility requirements, including a good credit score, income, and employment history.

Interest rates

Federal student loans have fixed interest rates set by Congress, while private student loans offer fixed and variable interest rates that the lender sets.

Federal student loans typically have lower interest rates than private loans.

Repayment options

Federal student loans offer several repayment options, including income-driven repayment plans, which base the monthly payments on the borrower’s income and family size.

Private students may offer less flexibility in repayment options and may not offer income-driven repayment plans.

Loan limits

Federal student loans have specific loan limits depending on the type of loan and the borrower’s grade level, while private student loans may offer higher loan limits depending on the borrower’s creditworthiness.


Federal student loans may have costs such as origination fees, while private student loans may have a variety of costs, including application fees, origination fees, and late fees.

Forgiveness and discharge options

Federal student loans offer several loan forgiveness and discharge options, including:

  • Public Service Loan Forgiveness
  • Teacher Loan Forgiveness
  • Total and Permanent Disability Discharge.

Private student loans may offer fewer options for loan forgiveness or discharge.

How to choose the right graduate student loan

Choosing the right graduate student loan is an important decision that can impact your finances for many years to come.

In general, federal student loans may be a better option for graduate students because they offer lower interest rates, more flexible repayment options, and more protections and benefits than private student loans.

Before you decide on a loan, consider your options and compare multiple loans to find the loan that offers the best combination of interest rates, repayment terms, fees, borrower benefits, eligibility requirements, and customer service.

When in doubt reach out for help

College Benefits Research Group wants to see our clients succeed during their educational journey.

We’ll be here every step of the way, whether you need advice on how to get into your dream school, get accepted for financial aid, or find other types of funding.

Looking at your specific situation and needs, we can offer you advice, support, and resources that will help ease some of your confusion and stress.

Contact us or check out our blog to learn more about our professional college planning specialists and where to find virtual workshops.