Earning your graduate degree can advance your career and increase your earning potential, but it might come with a high price tag. According to the Education Data Initiative, the average cost of a Master’s degree is $62,820, and about half of graduate students take out student loans to cover costs.
If you’re planning to borrow, it’s important to find a student loan with reasonable borrowing costs, repayment flexibility, and borrower protections. Before you sign on the dotted line, take time to compare your options and find a loan that best fits your financial situation.
Here’s how to find a graduate student loan so you can get the financing you need without overpaying in the long run.
Review your student loan options
Understanding your student loan options is the first step. Graduate students typically have two main financing options: federal student loans and private student loans. Here’s a quick comparison between the two:
| Federal graduate student loans | Private graduate student loans | |
|---|---|---|
| Issuer | U.S. Department of Education | Private lenders, like banks, credit unions, and online lenders |
| Eligibility requirements | Meet criteria for federal financial aid; no credit score requirement | Meet credit and income requirements and/or apply with a cosigner |
| Interest rate | Fixed; currently 7.94% for Direct unsubsidized loans | Fixed or variable; the rate you get largely depends on your credit |
| Origination fee | Currently 1.057% for Direct unsubsidized loans | Usually none (depends on the lender) |
| Repayment options | Standard plan, income-driven repayment, and others (often 10 to 20 years) |
Often 5 to 20 years |
| Deferment and forbearance | Yes | Sometimes (depends on the lender) |
| Eligible for loan forgiveness programs | Yes | No |
Start with federal student loans first
For most graduate students, federal student loans are the best place to start. They come with fixed interest rates, flexible repayment options, and various protections, including deferment and forbearance. Plus, federal loans are eligible for forgiveness programs, like Public Service Loan Forgiveness.
You also don’t need a minimum credit score to qualify for a federal Direct unsubsidized student loan. You simply must meet requirements for federal financial aid, which include citizenship criteria and enrolling in an eligible program.
Currently, graduate students can access two types of graduate school loans: Direct unsubsidized loans and Grad PLUS loans. As of July 1, 2026, however, the Grad PLUS loan program will be eliminated for new borrowers.
New borrowers can still access Direct unsubsidized loans, but they’ll have new borrowing limits:
- Up to $20,500 per year with a lifetime limit of $100,000 for graduate students
- Up to $50,000 per year with a lifetime limit of $200,000 for professional students, such as law, medical, and dental students
To take out federal student loans, you’ll need to fill out and submit the Free Application for Federal Student Aid (FAFSA). It’s generally wise to max out your federal student loan options before turning to a private loan.
Consider private student loans to fill a gap in funding
Given the new borrowing limits for Direct unsubsidized loans and elimination of Grad PLUS loans, federal loans may not cover your full graduate school cost of attendance. If you have a gap in funding, you might consider a private student loan.
Private student loans come from private lenders, such as banks, credit unions and online loan companies. Rates and terms vary, but lenders often offer the lowest rates to borrowers with the strongest financial profile, especially in terms of credit.
If you have a high interest rate, you may be able to lower it in the future through refinancing, especially if market rates drop, you improve your credit, or both.
How to find the best private student loan for graduate school
Private graduate school loans are available from a variety of lenders, so it can be challenging to narrow down your options. Here are some tips for finding the best private student loan for grad school.
1. Improve your credit
Unlike federal student loans, private student loans generally involve a credit check and income review. Lenders review your credit to see how you’ve handled debt in the past and assess your risk as a borrower.
If you have weak credit, you might not get approved or receive a higher interest rate. That’s why it’s worth improving your credit score before you apply.
Some steps you can take include:
- Pay all your loans and credit cards on time, as your payment history affects 35% of your credit score
- Reduce your credit utilization, which impacts 30% of your credit score. Paying down your credit card balances can help.
- Avoid closing old credit accounts; the length of your credit history affects 15% of your score.
- Don’t apply for lots of new loans or credit cards at once, because hard credit inquiries can lower your score.
- Dispute any errors you find on your credit report. You can order free weekly copies from AnnualCreditReport.com.
If you don’t have time to improve your credit, applying with a creditworthy cosigner may help you get approved for a loan or qualify for a lower interest rate. A cosigner shares equal responsibility for the loan, which reduces risk for the lender.
Keep in mind, however, that a cosigner’s credit will be impacted by how you pay back your loan. On-time payments can help improve credit, while late payments will drag it down.
2. Shop around
Private lenders can vary quite a bit in terms of interest rates, repayment options, and eligibility requirements. It always pays to shop around and find your best offer on a graduate school loan.
You can often check your rates online through private lenders prequalification, a process that won’t impact your credit score. Prequalifying gives you the chance to compare potential rates and terms before you commit.
Reading over customer reviews could be helpful, too. Find out what other borrowers have to say about their experience with the lender and its customer support team.
3. Compare interest rates and fees
When comparing loan offers, finding one with the lowest interest rate is a top priority. Even a small change in your rate could mean the difference of hundreds or thousands of dollars in interest charges.
Let’s say, for example, you take out a $15,000 loan. At a 12% interest rate, you’d pay $10,825 on a 10-year repayment term. But if you found an 8% interest rate, you’d pay $6,839 in total interest charges, nearly $4,000 less.
Consider whether the interest rate is fixed, meaning it stays the same over the life of the loan, or variable, meaning it can change with market conditions. You’ll have more predictable costs with a fixed rate, but a variable rate may lead to savings if it’s lower and you can pay your loan off quickly.
Keep an eye out for any fees that could add to your borrowing costs, as well, such as origination or application fees. Many private lenders don’t charge these fees, but review the fine print to make sure.
4. Go over repayment terms
Before you borrow a loan, make sure you understand how repayment will work. This includes how long you’ll have to repay the loan and what your monthly payment will be.
Many lenders let you choose terms between five and 20 years. A shorter term will mean higher monthly payments, but you’ll – accrue less interest. The opposite will be true for a longer term – lower monthly payments but higher interest costs overall.
Also, find out when repayment will begin. Some lenders offer a grace period that extends six or nine months after you graduate. You may also have the option of postponing or reducing payments during a graduate residency or fellowship.
All of these details are important when choosing a student loan that will fit your budget now and after you graduate.
5. Find out about borrower protections
Private student loans typically don’t have as many protections as federal loans do, such as income based repayment or student loan forgiveness. But many private lenders offer hardship options to pause payments through temporary deferment or forbearance if you lose your job, go back to school or enter a residency, fellowship or clerkship.
Alternative ways to pay for graduate school
When it comes to student loans, it’s always wise to keep borrowing to a minimum. Before taking on debt, consider some alternative ways to pay for graduate school:
- Grants and scholarships: Both grants and scholarships are a form of gift aid that you don’t have to pay back. You can find them through your school and private organizations. Even small awards can help reduce how much you need to borrow.
- Income from work-study or a part-time job: If your schedule allows, consider working part-time during graduate school to earn money. You might qualify for work-study or a graduate assistantship or find a part-time job on- or off-campus.
- Employer assistance: Some companies offer tuition reimbursement to qualifying employees who want to go back to school.
- Savings: Saving up money before graduate school could lower how much you need to take out in student loans.
Make graduate school loans work for you
Taking out graduate school loans is a commitment, so review your options carefully. Start with federal loans, which typically offer more flexibility than private student loans and are easier to access.
If you need additional funding, private student loans can fill the gap. Shop around with multiple lenders and review rates, fees, and repayment options before you pick an offer.
Finally, consider how you’ll pay back the loan based on your career path and expected income. By taking this informed approach, you can use graduate loans to reach your goals without creating unnecessary financial stress.
