Graduate Financing Options for 2011-2012 and Beyond
University Business, March 2012
- Subsidized Stafford loans are available based on financial need, and unsubsidized loans are available to everyone.
- For graduate students, the maximum annual loan limit is $20,500 (with up to $8,500 subsidized). The aggregate loan limit, including undergraduate debt, is $138,500, except for medical students, for whom the limit is $224,000.
- The interest rate for graduate students is fixed at 6.8 percent whether or not the loan is subsidized, and the origination fee is 0.5 percent, with an additional 0.5 percent charged if the borrower fails to make the first 12 monthly payments on time.
- As of July 2010, these loans were funded through the Federal Direct Loan Program rather than private lenders; beginning in July 2012, subsidized Stafford loans for graduate students will no longer be available, and the origination fee will be 1.0 percent with no additionfor delinquent repayment.
Grad PLUS Loans
- These loans are available regardless of need.
- The maximum loan limit is the cost of attendance less any other financial aid, with no aggregate maximum. The interest rate is fixed at 7.9 percent, with a 2.5 percent origination fee, and an additional 1.5 percent fee if the borrower fails to make the first 12 monthly payments on time.
- As of July 2010, these loans were funded through the Federal Direct Loan Program rather than private lenders. Beginning in July 2012, the origination fee will be 4.0 percent with no addition for delinquent repayment.
- Undergraduate students can take up to $2,500 per year as a tax credit toward their education under the American Opportunity Credit, formerly known as the Hope Credit.
- Graduate students must use the less-generous Lifetime Learning Credit, which covers up to 20 percent of tuition expenses for a maximum benefit of $2,000.
Sources: Institute for College Access and Success, U.S. Department of Education (Student Aid on the Web), Internal Revenue Service