Finding the Best Graduate Student Loans

Finding the best graduate student loans is like shopping for any other kind of loan. One must consider the interest rates, origination fees, annual loan limits, repayment terms and any other factors, as they can differ greatly between lending institutions.

Government institutions Nellie Mae and Sallie Mae -- The New England Education Loan Marketing Corporation and Student Loan Marketing Association, respectively -- are popular entities offering both Federal Graduate Student Loans and Private Graduate Student Loans.

Federal Graduate Student Loans

Federal Graduate Student Loans are often the least expensive way to borrow money for an advanced degree. Within them are Stafford and Graduate PLUS (GradPLUS) loans.

Federal Stafford Loans are very attractive because they allow students to:

  • Borrow at a low, fixed interest rate;
  • Earn a 0.25 percent interest rate reduction for making automatic debit payments; and
  • Defer loan repayment until after graduation.

GradPLUS loans supplement Federal Stafford Loans for unmet costs, generally after exhaustion of all other loan funds.

Private Graduate Student Loans

Many students choose Private Graduate Student Loans, either in lieu of the federal option, or to cover additional expenses not covered under their federal money.

These private loans are usually competitive, although carry higher interest rates than their federal counterparts and are not backed with a government guarantee.

In recent years, available loan capital from private lenders has declined significantly, making these loans harder to acquire. The upside is that many graduate students no longer need private loans because the federal government has increased limits for federal programs, which are more popular.

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