Similar to undergraduate education costs, the expenses associated with graduate or professional degrees have skyrocketed over the past several decades. According to Peterson’s, the average tuition cost of earning a graduate-level degree at a public college or university is an estimated $30,000 per year, while the same degree at a private institution may extend past $40,000.
Graduate students often have other financial needs, including housing, food, and commuting costs that increase the amount needed for a degree program. Earning an advanced degree has its merits, but these astronomical numbers often make it necessary to borrow for one’s education.
Federal student loans may be used to finance a graduate or professional degree, but only up to a point. The annual loan limit for graduate students utilizing federal student loans is $20,500, with an aggregate limit of $138,500 between undergraduate and graduate borrowing. When these limits are not enough to cover the full cost of a graduate-level degree program, students often turn to private student loan lenders to bridge the gap.
Private student loan lenders also impose total borrowing limits, but they can extend up to the full cost of the degree program, unlike federal student loans. If you are in need of private student loans for graduate school, here’s what you need to know.
What Type of Private Student Loan Do You Need?
Private student loans are available from several different lenders, but each provider may have a specific loan for a specific degree program. For instance, some lenders offer private student loans for students pursuing a law or medical degree, while others provide specific loans for those earning their MBA or business-related graduate degree.
It is important to recognize that private student loan lenders may have restrictions on loan amounts and school affiliations for each type of degree program. Understand these nuances before selecting a private loan lender.
Private Student Loans for Graduate School
Each private student loan lender for graduates will have its own requirements for who qualifies, in what amount, and options for repayment which should be reviewed in full before applying for and accepting a private loan. Here are a few items to look for in the fine print of private student loans for graduate school.
- General Costs - The biggest added cost with a private student loan for grad school is the interest rate. Private student loan lenders offering graduate school loans charge varied interest rates depending on the borrower’s credit history, income, and the prevailing interest rate market. Interest rates may also be offered as variable, meaning they fluctuate, or fixed, meaning they remain steady for the life of the loan.
- Credit Requirements - Unlike federal student loans for grad school, private student loans require a strong credit history and score to qualify. Borrowers must have a clean track record of on-time payments, responsible use of credit accounts, and little to no black marks like bankruptcy, foreclosure, or accounts in collections.
- Loan Limits - Private loans for grad school are available for varying amounts, some up to the full cost of tuition and others limited to a set dollar amount.
- Repayment Options - Private student loan lenders offer limited repayment plans for graduate borrowers, including deferred repayment, fixed full repayment, and interest-only. Borrowers should understand the different options offered by the lender and select the plan that works best for their budget both in and out of school.
- Cosigner Requirements - Some private student loan lenders allow graduate students to use a cosigner to improve the strength of an application. Cosigners may be released over time, but not all lenders provide this feature.
Examples of Major Private Student Loan Lenders by Type
MBA Private Student Loans
Many private student loan lenders offer financing options for borrowers pursuing their MBA. Citizens One, a division of Citizens Bank, offers well-qualified borrowers private MBA student loans with fixed or variable interest rates, repayment terms up to 15 years.
Medical School Private Student Loans
Medical school is a significant undertaking, not only regarding the time commitment to earn a degree but also in the amount needed to finance a degree program. Fortunately, many private lenders offer medical school private student loans, including Ascent and Sallie Mae.
With Ascent private student loans for medical school, students may borrow up to $200,000 with or without a cosigner. Ascent offers private loans with variable or fixed interest rates and repayment terms extending up to 15 years, as well as deferment while in residency.
Sallie Mae’s medical student loans provide options for loans with fixed or variable interest rates, and no maximum on the amount which can be borrowed. Sallie Mae also offers varied repayment options and terms designed to help medical students finance their education affordably, with repayment extending up to 20 years.
When considering private student loan lenders for medical school loans, look for those that offer flexibility in deferment given the unique degree requirements of residency and relocation.
Dental School Private Student Loans
Similar to medical school private student loans, students pursuing a degree in the field of dentistry need a lender that understands the unique requirements of the program and the total cost involved in earning the degree. Selecting a private lender for a dental school loan requires some research as to what repayment plans are offered, the interest rates available, deferment period, and the ability to add a cosigner to an application.
One option for dental school private student loans is Sallie Mae, which offers both fixed and variable interest rates and a long deferment period up to 48 months. The lender also gives borrowers the opportunity to add a cosigner if needed, and the total amount available has no maximum for all years of dental school.
PNC also offers dental school private student loans to qualified borrowers. Both variable and fixed interest rates are available, and repayment terms can extend up to 15 years. PNC also offers a long deferment period, up to 10 1/2 years to cover residency. A cosigner may be used to secure a dental school private student loan with PNC, and a request for the release of the cosigner can be submitted after four years of on-time payments.
Law School Private Student Loans
Because law degrees take less time to complete than medical or dental school degrees, more private student loan lenders offer students options for financing their law school education.
College Ave is one private lender that offers law school student loans, with options for variable and fixed interest rates. Law school loans with College Ave have flexible options, with terms extending up to 15 years and plans that include full repayment, deferred repayment, or interest-only repayment. Law school students can borrow up to 100 percent of the cost of the school-certified expenses associated with attendance.
Sallie Mae also offers law school loans for borrowers, with options for adding a cosigner, flexible repayment options, and deferment of payments while in school.
Residency Private Student Loans
Residency private student loans are also available for students pursuing a professional medical degree. These private student loans are meant to cover the costs related to residency, not necessarily the degree program itself.
For instance, PNC offers residency private student loans for MD, DDS, DO, and DVM residents, covering expenses including the interview process, relocation, and living expenses during residency. These loans may have a repayment term of up to 15 years, variable or fixed interest rates, and a maximum loan amount of $15,000.
A cosigner may be used with a PNC residency private student loan, with the request to remove a cosigner after four years of on-time payments.