3 Best Student Loan Options For Graduate School

(Photo Credit: Michael Fein/Bloomberg)

If you are starting or returning to graduate school this fall, then it’s that time of year to start thinking carefully about your student loan strategy.

Whether you are an aspiring dentist, doctor, pharmacist, veterinarian, lawyer or MBA, here is what you need to know to make an informed decision on how to finance your graduate education.

According to Make Lemonade, you can expect to graduate with the following student loan debt if you pursue one of these degrees:

Dental School: $260,000

Medical School: $180,000

Pharmacy School: $160,000

Veterinary School: $140,000

Law School: $140,000

Given the expected debt load at graduation, it is critical that you understand your options now and have a student loan game plan in place before you start graduate school.

What are the best graduate school student loans?

When it comes to graduate school loans, you have two primary options: federal student loans and private student loans.

For federal student loans, there are two types: Unsubsidized Stafford Loans and Graduate PLUS Loans.

1. Stafford Loans

Amount You Can Borrow:  For graduate school, you can borrow $20,500 per year of Stafford loans with an aggregate limit of $138,500, which includes any Stafford loans that you borrowed as an undergraduate. These loans are fixed rate Direct unsubsidized loans. Each year, under federal law, Congress sets the interest rate on federal student loans with an effective date of July 1.

The current interest rate for Direct Unsubsidized Loans for graduate students from July 1, 2016 – June 30, 2017 is 5.31%.

Fees: When you borrow a Stafford Loan, the federal government charges an origination fee of 1.069% of the disbursed loan amount. The fee amount is deducted from the amount that you borrow. Therefore, the student loan amount that you receive is lower than the amount that you borrowed. However, you are still responsible to repay the full amount of the student loan that you borrowed. For example, if you borrow $20,500 in Stafford loans, you will pay an origination fee of $219.14 and receive a net amount of $20,280.86. You will still be financially responsible to repay the $20,500.