Student Loans by Degree Type
Financial Needs Differ From Undergrad to Grad
The economic disparities between undergraduate and graduate students are quite marked. Both student populations have remarkably diverse needs including financial, academic, and professional. But one common factor should remain: all students should have access to affordable and practical student loans from a variety of legitimate sources.
FAFSA: the Common Thread
The Free Application for Federal Student Aid (FAFSA) is a crucial topic in every conversation on student loans. The FAFSA form is the application that gains you access to the federal loan program. Truth is the FAFSA is also the clincher for a host of other types of student loans, including state-based loans, aid from colleges and universities, and many types of scholarships and grants.
Surprising to many is the fact that nearly 8 million students fail to actually file a FAFSA each year; this includes all types of students, regardless of income. Many of those same students would absolutely qualify for some type of federal aid; nearly 2 million are estimated to be low-income, and of those close to a million would likely qualify for Pell Grants. Graduate or undergraduate —don’t be one of these numbers.
FAFSA Truth
The FAFSA is not fun to fill out: it’s a clumsy, 5-page tax-like document that is in dire need of revision, but until such a time that this happens you’ll have to muddle through. There are no short forms or quick ways to get around it, so just fill it out and file it on time. FAFSA deadlines vary: there are federal deadlines and state deadlines, as well as deadlines from colleges and universities, and scholarships that list the FAFSA as a requirement may have their own specific deadlines.
Most Popular Student Loan is a Best Bet for Both Undergrads and Grads
The Stafford Loan is often considered to be the most widely disbursed student loan. This loan program is so big it embraces both undergrads and grad students in subsidized and unsubsidized versions. The federal government has just made the Stafford even more attractive. By 2008 the interest rate will be halved to a very reasonable 3.4% squeezing as much accessibility as is possible to meet the needs of an even wider audience.
Undergraduate Student Loans
Undergraduate student loans comprise a collective bunker of financial aid products from federal, state, and private lenders.
Federal Undergraduate Loans
Undergrads, no matter what, you must go for the federal loans first—the Direct Loans or Federal Family Education Loan Program (FFELP) loans, such as the Stafford Loan and PLUS Loan.
We’ve already mentioned the popularity and degree flexibility of the Stafford Loan; you may qualify for subsidized funds if your family income is low enough. And the good news is that everyone qualifies for unsubsidized Staffords; income does not matter. Students that carry a combination of subsidized and unsubsidized are not uncommon.
If your financial need is significant enough you may even be able to qualify for extra federal funds with a campus-based Perkins Loan.
Since many parents are willing to bear a good chunk of the financial burden from their undergraduate college-bound children the federal government designed the Parent PLUS loan. Parents may borrow up to the cost of their child’s education, but they must have worthy credit.
State-Based Undergraduate Loans
Did you know that many states offer their own brand of student loan? In some cases a state government makes good deals on special FFELs or they partner with a leading loan guaranty agency or lender to help residents find the most affordable student loan solutions. So don’t overlook state-specific financial aid options as companion to your federal loans.
This is an easy step: we have already assembled a big list of state loan programs, listed A-Z by state. Check with your home state and the state in which you’ll be going to school for programs that are right for you. Couldn’t be simpler.
Private Undergraduate Student Loans
When we talk about private undergraduate student loans we are talking about high interest, credit-based loans also known by their alias as alternative loans.
Here’s the deal…Private loans are a last resort. Don’t be scared off by them; they can serve a very good purpose, but approach them with respect. Squeeze all the financial aid you can out of your government sources first before you seek any private or alternative funds.
Graduate Student Loans
Graduate students are typically considered independent students with or without financial need. The increase in graduates with absurd amounts of debt has raised the concern of federal lawmakers who have sought to make federal graduate student loans with limits and interest rates that are more appealing and affordable.
Federal Loans for Grad Students
So the Stafford Loan is a hands down first step for grad students. It comes sensibly packaged with a higher loan limit than for undergrads. If you are in dire financial straits your campus may even approve you for a Perkins Loan.
The PLUS Loan for Graduate and Professional Students is specifically designed to give graduate students more financial muscle. This program may not offer the same low interest rates as the Staffords and does require a borrower with good credit, but it fills in gaps where needed and where many students may formerly have resorted to private loans.
State-Specific Graduate Student Loans
States offer a wide range of financial aid options, some even have managed a better deal than the FFELs direct from a lender. Check out the A-Z list of state student loans we’ve pulled together. Choose your home state along with the state in which you’ll be attending college.
Private Graduate Student Loans
Before you go to private loans, we urge you to squeeze every federal dollar you can from your government graduate student loans. When you’ve gone as far as you can then a good time to explore the choices in private or alternative loans may have arrived.
High Need Loans for Graduate Students
Why is it that fields like nursing, medicine, law, and teaching often fall short of professionals? Medicine and law require students with a high degree of motivation and discipline. Grads carry many thousands of dollars in debt, but their jobs also pay quite well once they are out of residencies and pass their required industry exams. Nursing and teaching require patience and a “calling.” Traditionally these professions—two of the most necessary—are known for their nominal pay.
High need or critical need loan programs for med students, nursing and student teachers, and law students provide a partial solution and are especially focused on graduate students. For example:
“Missed Opportunities: Students Who Do Not Apply for Financial Aid,” ACE, October 2004, accessed October 15, 2007, http://www.cherrycommission.org/docs/Resources/Participation/Student_FinancialAidArticle.pdf.
