Types of Graduate Student Loans

Graduate student loans are loans offered to students who have completed their undergraduate degree and are going to graduate school. The funds cover all the costs a grad student incurs in obtaining an advanced degree. This includes tuition, books, fees, room and board, school supplies, and personal expenses.
There are two types of graduate student loans – federal and private. Here’s a look at how graduate student loans work.
Dollar bills stacked on the corner of a laptop.

Federal Graduate Student Loans

Federal graduate student loans are funded by the federal government. You have to fill out the FAFSA (Free Application for Federal Student Aid) to apply for these loans.

There are two types of federal graduate student loans – Federal Direct Unsubsidized Loans and Federal Direct Graduate PLUS Loans. Although both are funded by the federal government, the similarities end there. Both loans differ considerably in terms of interest rate, maximum amount you can borrow, and other terms.

Federal Direct Unsubsidized Loans

Federal Direct Unsubsidized Loans are also known as Stafford Loans. They are also called Federal Direct Loans as there are no subsidized loans available for graduate students. All Federal Direct Loans are unsubsidized.

You must enroll at least part-time in a program to qualify for this type of loan. Your school will calculate your loan amount based on the information you submit through the FAFSA. These loans are not based on financial need, nor are they based on credit scores. Your credit score does not impact your eligibility or the amount you can borrow and you won’t need an endorser.

Federal Direct Loans offer only fixed interest rates. They do not have offer the variable rate option. But they have lower interest rates and more flexible repayment options as compared to private graduate student loans.

You’ll have to pay a loan fee when you take a Federal Direct Loan. This is calculated as a percentage of the total disbursed loan amount.

Federal Direct Graduate PLUS Loans

Loan amounts offered by the Federal Direct Loans are often not enough to cover the total cost of tuition. Most grad students need to apply for additional funds to make up the deficit. If you need more financial aid to cover the cost of grad school, Federal Direct Graduate PLUS Loans are the best option.

To qualify for PLUS Loans, you must meet two main criteria. You must enroll at least half-time in a program leading to a graduate or professional degree or a certificate. The school you’re enrolled in must be on the list of eligible schools.


There are several benefits to taking Federal Direct Graduate PLUS loans. You can apply for the total cost of attendance, less any financial aid that you’ve already been awarded through other sources including Federal Direct Loans. You can choose from several types of loan repayment plans to suit your financial circumstances.

Graduate PLUS Loans also offer only the fixed interest rate option like Direct Graduate Loans. You’ll also pay a loan fee on this type of loan. The amount is calculated as a percentage of the total disbursed amount.


The biggest difference between Direct Graduate Loans and Graduate PLUS Loans is that the latter takes your credit history into consideration. Getting a Graduate PLUS loan is difficult if you have adverse credit history. But it’s not entirely impossible. You may still meet the eligible criteria and get approved if you meet additional requirements laid down by your school.

Another difference is that Direct PLUS Loans have a higher rate of interest as compared to Direct Graduate Loans.

Your graduate school will determine your eligibility and calculate how much you can borrow against each of these loans. The information you submit through the FAFSA is used to make these decisions. The cost of attendance and total amount financial aid you’re receiving through other sources also factors in the decision.

Private Graduate Student Loans

Private graduate student loans are offered by private financial institutions and not the federal government. Banks and credit unions are the most common private student loan lenders. You apply directly to the lender of your choice to get a private graduate student loan.

Comparing Lenders

The most important thing to remember is that private lenders set their own interest rates and loan terms. This means interest rates can vary considerably from one lender to another. The terms and conditions also varies significantly among lenders. Before applying for a private graduate student loan, you must spend time comparing lenders and their rates and terms. Comparing lenders means choosing a lender that’s best suited for you.

Private lenders will determine your eligibility based on a couple of factors, primarily your credit history. You’ll get approved easily with a good credit score and likely qualify for a lower interest rate. On the other hand, bad credit makes loan approval more difficult. The few lenders who do approve will almost certainly charge you higher interest rates. Applying with a creditworthy cosigner can help increase your chances of approval when you have bad credit.

In general, private student loans have higher interest rates compared to federal student loans. But if you have strong credit, you may be able to find private loans with interest rates that are lower than that of Direct Graduate PLUS loans. It helps to do some research on interest rates before applying for a Direct PLUS loan or a private student loan. This will help you choose the best graduate student loans for you.


Benefits of private student loans include the ability to choose between fixed and variable interest rates. Moreover, there are no restrictions on how much you can borrow or what you can use the funds for.

Different types of graduate student loans make it possible for undergrads to get an advanced degree and specialize in their field. Although it means higher cost of education, it improves employability and income potential and that makes these loans worth it.

Compare rates today with College Raptor’s Student Loan Finder.


Lender Rates (APR) Eligibility
Citizens logo.
6.98%-15.04%* Variable
5.99%-14.00%* Fixed
Undergraduate and Graduate
Sallie Mae logo.
6.37% - 16.70% Variable
4.50% - 15.49% Fixed
Undergraduate and Graduate
Credibe company logo.
4.98% - 16.85% Variable
4.07% - 16.49% Fixed
Undergraduate and Graduate
Lendkey company logo.
6.07% - 11.31% Variable
4.39% - 10.39% Fixed
Undergraduate and Graduate
Ascent company logo.
6.24% - 15.85% Variable
4.29% - 15.76% Fixed
Undergraduate and Graduate
6.54% - 11.08% Variable
3.95% - 8.01% Fixed
Undergraduate and Graduate
Earnest company logo.
5.62% - 18.26% Variable
4.11% - 15.90% Fixed
Undergraduate and Graduate
4.98% - 12.79% Variable
8.42% - 13.01% Fixed
Undergraduate and Graduate
College Raptor is not a loan lender and does not assume responsibility for suggesting a loan to a user who may not be eligible for it. Rates, terms, conditions, eligibility, approval, and other considerations are the decisions of the lenders and may vary depending on which lender or marketplace the user selects. We urge users to carefully consider and review all loan options and terms before committing to taking out a loan.

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