Graduate Student Loans Subsidized

Last Updated on December 15, 2022

Are you a graduate student who’s struggling to make ends meet? If so, you may be eligible for subsidized loans.

What Is a Subsidized Student Loan?

A federal student loan is considered subsidized when the government pays the interest that accrues on your behalf while you’re in school. This means that if you’re a graduate student and have a subsidized loan, your payments will be lower than they would be if you had an unsubsidized loan.

How Do I Get One?

To get a subsidized loan, you’ll need to fill out an application and submit it to your lender. The application process is different depending on what type of lender you choose (federal or private). In most cases, though, there are no fees associated with applying for a subsidized loan.

Graduate Student Loans Subsidized

You can’t get subsidized loans for graduate school. You used to be able to take out these loans — for which the government pays the interest while you’re in school — but subsidized loans for grad students were phased out July 1, 2012. Undergraduate students can still get subsidized loans.

Federal unsubsidized loans are available if you’re enrolled in graduate school at least half-time. Exhaust these loans first if you need to take out graduate student loans. While unsubsidized loans will cost more than subsidized loans, they’re likely still the cheapest option available.

Can you get a parent PLUS loan for graduate school?

Parent PLUS loans aren’t available for graduate school. Only parents of undergraduate students can get these loans. Graduate students can take out graduate PLUS loans. These are like parent PLUS loans but in the student’s name, not the parent’s.

Parents who want to help pay for advanced degrees can take out or co-sign private graduate school loans for their children. Private student loans have lower fees than PLUS loans and may come with lower interest rates, depending on your credit history.

But opting for a private loan means forgoing benefits like income-driven repayment and Public Service Loan Forgiveness. Before passing on PLUS loans, consider whether you’ll need those options based on your graduate degree and career path.

How much money can you get for graduate school?

Borrowing limits for graduate students can vary by loan type, as well as by how much money you took out as an undergraduate:

  • Federal subsidized and unsubsidized loans. Graduate students aren’t eligible for subsidized loans, but can borrow up to $20,500 a year in federal unsubsidized loans. You cannot receive more than $138,000 in unsubsidized and subsidized loans in total, including any loans you took out as an undergraduate.
  • Federal graduate PLUS loans. There is no specific annual or lifetime dollar limit for grad PLUS loans. You can borrow up to your school’s official cost of attendance, minus other aid you’ve received. For example, if your cost of attendance was $70,000 and you got $30,000 via a fellowship and unsubsidized loans, you could take out $40,000 in a grad PLUS loan.
  • Private graduate student loans. How much money you can get will depend on the lender. Many cap your annual borrowing at cost of attendance, similar to grad PLUS loans, but have aggregate lifetime limits. Those amounts may depend on your graduate degree. For example, you can borrow more from Citizens Bank if you’re pursuing a professional graduate degree versus an academic one.

Grad students can also qualify for other forms of financial aid for graduate school, including from grants, scholarships, fellowships and employer tuition assistance.

How to take out federal loans for graduate school

You can apply for federal student loans for graduate school by submitting the Free Application for Federal Student Aid, or FAFSA. Graduate students don’t have to include their parents’ income information on the FAFSA.

Your school will send you a financial aid award letter based on your FAFSA. Even if that award letter includes a graduate PLUS loan, you’ll still need to submit a separate application to receive this funding.

You must not have an adverse credit history to take out a PLUS loan for graduate school. If you’re ineligible because of your credit, you can appeal this decision or reapply with an eligible endorser. An endorser, like a co-signer, will share responsibility for the PLUS loan. All graduate students can receive unsubsidized loans, regardless of their credit.

If you want to take out a private graduate student loan, apply directly with the lender. You may need a co-signer to qualify.

Which graduate student loan is right for you?

The average student loan debt for graduate school alone is $71,000, according to the latest data from the National Center for Education Statistics. But some students take on much more for advanced degrees; dentists average $292,169 in debt, for example.

Federal loans are usually the best choice when paying for grad school because programs like income-driven plans can help keep payments manageable. However, if you have good credit and are entering a profession with strong earning potential, private loans may cost less in the long run.

Many lenders offer student loans for graduate school. Some also have loan programs for specific professional degrees. Evaluate all your options to get the best deal possible.

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Because subsidized loans aren’t available for graduate students, interest will accrue if you choose to not make payments while enrolled. If you can put some of your graduate student salary or stipend toward interest-only payments, you can avoid the amount you owe increasing.

Direct Subsidized Loans and Direct Unsubsidized Loans are federal student loans offered by the U.S. Department of Education (ED) to help eligible students cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. (You might see Direct Subsidized Loans and Direct Unsubsidized Loans referred to as Stafford Loans or Direct Stafford Loans, but these aren’t the official loan names.)

subsidized vs unsubsidized loan

In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.

Quick Overview of Direct Subsidized Loans

Who can get Direct Subsidized Loans?

Direct Subsidized Loans are available to undergraduate students with financial need.

How much can you borrow?

Your school determines the amount you can borrow, and the amount may not exceed your financial need.

Who will pay the interest?

The U.S. Department of Education pays the interest on a Direct Subsidized Loan

  • while you’re in school at least half-time,
  • for the first six months after you leave school (referred to as a grace period), and
  • during a period of deferment (a postponement of loan payments).

Quick Overview of Direct Unsubsidized Loans

Who can get Direct Unsubsidized Loans?

Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need.

How much can you borrow?

Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.

Who will pay the interest?

You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods.

Good to know

If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan).

Try This Resource

Federal Student Loans: Basics for Students—Provides students with information on Direct Loans. Includes an overview of eligibility, the application process, and repayment.

How much can I borrow?

Your school determines the loan type(s), if any, and the actual loan amount you are eligible to receive each academic year. However, there are limits on the amount in subsidized and unsubsidized loans that you may be eligible to receive each academic year (annual loan limits) and the total amounts that you may borrow for undergraduate and graduate study (aggregate loan limits). The actual loan amount you are eligible to receive each academic year may be less than the annual loan limit. These limits vary depending on

  • what year you are in school and
  • whether you are a dependent or independent student.

If you are a dependent student whose parents are not eligible for a Direct PLUS Loan, you may be able to receive additional Direct Unsubsidized Loan funds.

The following chart shows the annual and aggregate limits for subsidized and unsubsidized loans.

YearDependent Students (except students whose parents are unable to obtain PLUS Loans)Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans)
First-Year Undergraduate Annual Loan Limit$5,500-No more than $3,500 of this amount may be in subsidized loans.$9,500-No more than $3,500 of this amount may be in subsidized loans.
Second-Year Undergraduate Annual Loan Limit$6,500-No more than $4,500 of this amount may be in subsidized loans.$10,500-No more than $4,500 of this amount may be in subsidized loans.
Third Year and Beyond Undergraduate Annual Loan Limit$7,500 per year-No more than $5,500 of this amount may be in subsidized loans.$12,500-No more than $5,500 of this amount may be in subsidized loans.
Graduate or Professional Student Annual Loan LimitNot Applicable (all graduate and professional degree students are considered independent).$20,500 (unsubsidized only).
Subsidized and Unsubsidized Aggregate Loan Limit$31,000-No more than $23,000 of this amount may be in subsidized loans.$57,500 for undergraduates-No more than $23,000 of this amount may be in subsidized loans.

$138,500 for graduate or professional students-No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study.

Notes:

  • The graduate aggregate limit includes all federal loans received for undergraduate study.
  • The aggregate loan limits include any Subsidized Federal Stafford Loans or Unsubsidized Federal Stafford Loans you may have previously received under the Federal Family Education Loan (FFEL) Program. As a result of legislation that took effect July 1, 2010, no further loans are being made under the FFEL Program.
  • Effective for periods of enrollment beginning on or after July 1, 2012, graduate and professional students are no longer eligible to receive Direct Subsidized Loans. The $65,500 subsidized aggregate loan limit for graduate or professional students includes subsidized loans that a graduate or professional student may have received for periods of enrollment that began before July 1, 2012, or for prior undergraduate study.

If the total loan amount you receive over the course of your education reaches the aggregate loan limit, you are not eligible to receive additional loans. However, if you repay some of your loans to bring your outstanding loan debt below the aggregate loan limit, you could then borrow again, up to the amount of your remaining eligibility under the aggregate loan limit.

Graduate and professional students enrolled in certain health profession programs may receive additional Direct Unsubsidized Loan amounts each academic year beyond those shown above. For these students, there is also a higher aggregate limit on Direct Unsubsidized Loans. If you are enrolled in a health profession program, talk to the financial aid office at your school for information about annual and aggregate limits.

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