Loans are an investment in your future
Our 1-2-3 approach to paying for graduate school recommends that after you’ve used savings and money you don’t have to pay back, you should turn to federal financial aid and federal student loans. Only then should you consider a private graduate student loan. Here’s what you need to know about your options in graduate student loans, both federal and private.
Federal vs private loans for graduate students
While there are several ways to borrow money, the two general types of loans specifically designed for graduate students are federal loans and private loans. We’ll cover the differences between them, but there are some shared features:
- You have to pay them back with interest.
Interest begins to accrue (grow) from the day that your graduate student loan is disbursed (sent) to your school. Learn more about interest.
- There’s a grace period.
You’ll generally have six or more months after leaving graduate school before you begin making principal and interest payments on federal student loans. (The grace periods for private loans will vary depending on the lender.) Loans specifically for professional programs like law, medical, and dental degrees may have a longer grace period.
- They’re disbursed directly to your graduate school.
Unlike personal loans or loans for some career-related activities (residency and relocation), the graduate student loan money goes to the school’s financial aid office, not to you.