Higher education can get expensive, but for students in a study program, the investment is worth it.
A new Wall Street Journal analysis has found that earning a master’s degree in business administration is a good way to make sure you earn more money quickly than what you borrowed to pay for your education.
In about 98% of universities that offer MBA programs, students typically had more income than debt just two years after graduation. In contrast, only 6% of law school programs had graduate students with incomes greater than debt over the same period.
Yet the cost of graduate school tuition can be a barrier for prospective students, no matter how much they expect to earn upon graduation. In many cases, it is necessary to borrow student loans to finance post-secondary education.
Keep reading to learn more about your payment options for graduate education, including federal and private student loans. If you decide to borrow private loans to fund the costs of your MBA program, visit Credible to compare interest rates from several lenders without affecting your credit score.
THE PUBLIC SERVICE LOAN REDON IS JUST EASIER FOR 550,000 BORROWERS
How to pay for graduate studies
Borrowing money to pay for graduate studies is slightly different from taking out loans for an undergraduate program. The federal government sets different loan limits and interest rates for these loans, which means that many students are turning to outside sources like private student loans to finance their studies. If you want to increase your income by earning a graduate degree, consider these financing options:
Consider your student loan options in each section below.
Apply for Federal Assistance by Completing the FAFSA
The US Department of Education provides more than $ 120 billion a year in financial assistance, including loans, scholarships, and work-study programs. Applying for federal assistance is a good place to start borrowing money for college since these types of student loans offer low fixed rates as well as protections for borrowers. These include income-based repayment plans (IDRs), administrative forbearance and student loan exemption programs.
To determine your eligibility for federal loans and grants, you will need to complete the Free Federal Student Assistance Application (FAFSA) form. According to Federal Student Aid (FSA) website, most borrowers can complete the application in less than 30 minutes.
The downside to using federal direct loans to pay for graduate education is that the total cost of attendance can exceed the loan amount. The direct loan program borrowing limit for graduate and professional students is $ 20,500 per year for the 2021-2022 academic year, which may not be enough to cover tuition, fees and the like. expenses.
4 PRIVATE STUDENT LOAN TIPS FOR UNDERGRADUATE STUDENTS
Bridge the Gap with Federal PLUS Loans or Private Loans
When a student borrower reaches the federal direct loan limit in any given year, they can turn to federal grad PLUS loans or private student loans. Here’s a quick rundown of the differences:
- Direct PLUS loans have relatively high interest rates which depend on the year the borrower takes out the loan. For the academic year 2021-22, the interest rate of the PLUS loan is 6.28% with a loan fee of 4.228%.
- Private student loans are issued by banks, credit unions, and online lenders rather than the federal government. Interest rates vary from lender to lender and are highly dependent on the credit rating of the borrower.
- A borrower may be able to get a lower rate and better repayment terms on private graduate school loans compared to PLUS graduate loans if they have good credit or a creditworthy co-signer. But private student loans are not eligible for federal protections such as IDR plans, federal deferral, and student loan forgiveness.
When comparing your graduate student loan options, it is important to know the details of each borrowing method. Fortunately, most private student lenders allow you to view your estimated credit score with a smooth credit check, which will not hurt your credit score. This way, you can determine whether federal or private loans will be better suited for your situation.
You can browse the private graduate student loan interest rates from real private lenders in the table below, and visit Credible to compare rates from multiple lenders for free.
THIS IS WHY REFINANCING A FLOATING RATE STUDENT LOAN CAN BE A SMART MOVEMENT
Already graduated? Consider refinancing your loans
Refinancing a student loan involves taking out a new private loan to pay off your university debt. Refinancing at a lower interest rate can help you pay off your loans faster, lower your monthly payments, and save money on interest over time.
Shorter-term refinancing can help you get a low rate and pay off your student debt faster. A recent analysis by Credible found that qualified borrowers who refinanced on a shorter loan term were able to save nearly $ 17,000 in interest charges and pay off their debt 41 months faster.
It may also be possible to lower your monthly student loan payments by refinancing a longer term loan. Borrowers who have used Credible’s Market to refinance using this strategy have reduced their monthly payments by over $ 250, all without increasing the total cost of interest over the life of the loan.
Keep in mind that refinancing your federal student loans to a private loan would make you ineligible for the borrower protections mentioned above.
Not sure if refinancing is right for you? See your estimated student loan refinance rate on Credible without affecting your credit score, then use a student loan refinance calculator to see if this repayment option is worth it.
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