Riley H. answered • 05/15/19
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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.
Repayment: Student loan repayment begins six months after you graduate or become enrolled less than half time.
2. Graduate PLUS Loans
Amount You Can Borrow: Graduate PLUS Loans are for both student and parent borrowers (Parent PLUS Loans). You can borrow up to the cost of attendance as determined by your school, less any financial aid received. Unlike Stafford loans, there is no aggregate limit. To qualify for a Graduate PLUS Loan, you must not have an adverse credit history. You have to complete a Free Application For Federal Student Aid (FAFSA®) and can request a Direct PLUS Loan at StudentLoans.gov.
The current interest rate for Graduate PLUS Loans from July 1, 2016 - June 30, 2017 is 6.31%. Like the Stafford loan, the Graduate PLUS Loan is a fixed rate loan (but a 1% higher interest rate).
Fees: When you borrow a Graduate PLUS Loan, the federal government charges an origination fee of 4.076% of the disbursed loan amount, which is deducted from your loan principal before your student loan is disbursed and sent to your school.
Repayment: If you are a student borrower, repayment begins six months after you graduate or become enrolled less than half time. If you are a parent borrower, typically repayment begins once your loan is fully disbursed. However, you may request a deferment while your child is enrolled at least half-time and for an additional six months after your child graduates, leaves school or drops below half-time enrollment.
3. Private Student Loans
A private student loan is a non-government student loan that may be issued by a bank, credit union or other financial services company. Unlike Stafford and Graduate PLUS Loans, which are both fixed interest rate student loans, private student lenders typically offer both fixed and variable interest rate loans. With private student loans, you typically have to start repayment while in school, but some lenders have programs to minimize the payments while you are in school. If you have a strong credit profile, you can find private student loans with both lower fixed and variable interest rates than federal government student loans.
(Information from Forbes)
