For most grad students, borrowing money to pay for school is a fact of life. Graduate school loans are considered a justifiable means to an end, but can also be a major contributor to excessive debt. Be a smart borrower and avoid overwhelming loan grad-school loan obligations by understanding your options and keeping your debt to a minimum.

Consider your options when considering graduate school loans

The most costly mistake you can make is not considering all your options.

  • Don’t just apply for financial aid through your school and government-lending programs. Do as much research as possible and apply for all the free money you can! Dig out the scholarships and grants for graduate school that can help you. Anything you get will reduce your out-of-pocket expenses.
  • Explore funding alternatives available to grad students, such as teaching and research assistantships, or fellowships if you’re pursuing your doctorate.
  • More than likely, your financial aid packages include offers of student loans to help cover costs, but you don’t have to borrow the entire amount that is offered to you. You can choose to have the amount reduced, or decline the loan altogether.
  • Figure out a budget before you borrow. Many people overestimate what they’ll need and subsequently, borrow more than necessary.
  • The Federal Perkins and unsubsidized Stafford loans can be good deals. If they’ve been offered to you, accept them—assuming you’ve decided you need to borrow money, of course! Do this before looking into other loans to cover any still outstanding need. Remember that interest accrues for unsubsidized loans during your time at school, unless you opt to pay. And don’t forget to find out about the PLUS grad school loan.

Do your research when considering a graduate school loan offer

A smart borrower is an informed borrower. Read up on graduate loans before you sign anything!

  • If you do decide to borrow money, remember that there are different types of educational loans. Confirm the interest rate, loan fees, and repayment schedules of each loan so you can make an informed decision about what you think you’ll be able to live with.
  • Student loans, particularly federally backed loans, are offered by a wide variety of lenders. Your school may have a list of preferred lenders or you may choose to find one on your own. However you go about deciding, there are two criteria that should guide your decision: borrower-benefit programs and customer service.
  • Borrower-benefit programs help to reduce the cost of repaying your loan. For example, the lender may offer to pay your loan origination fees, or reduce your interest rate after you’ve made a required number of payments on time.
  • Good customer service is important since you’ll most likely be dealing with your lender for several years. Find out if your lender sells their loans, as that may have a bearing on your decision to use them. Ultimately, you’re the one who has to keep in touch with your lender, but if you can find one that works hard to be easily available to you, then that’s probably a lender you should consider.

Repayment is always part of graduate school loans

It may seem like it’s a long way off, but keeping the end in mind at the beginning could affect how much you ultimately pay.

  • Some of the loans you’re offered will accrue interest while you’re in school. Consider paying the interest while you’re attending school to reduce the payments that will be due after you graduate.
  • If you’re working full-time while attending graduate school, you may be able to get reimbursement for at least some of your tuition, if not all of it. You may be able to reduce the amount you need to borrow or apply any reimbursements to amounts you owe.
  • Avoid credit card debt, avoid credit card debt, and avoid credit card debt! Adhere to the old adage, “if you can’t pay cash for it, you can’t afford it.”

Graduate loans are a long-term commitment. Make sure you manage them by not letting them manage you.