Wednesday, September 16, 2009

The Similarities And Differences In Graduate and Undergraduate Financial Aid

By: Donald Saunders

In less than forty years the cost of a college education has risen dramatically and today a college education will cost about ten times as much as it did when I myself attended college. Fortunately however there are now a variety of programs available to help you to fund your education and the path that you follow will depend upon whether you are an undergraduate or a graduate student.

As an undergraduate you will rely on an often complicated mixture of scholarships, grants and loans and, in the case of loans, these will either be taken out alone, by your parents, or as a combination loan in which for example you take out the loan in your own name with your parents as co-borrowers or co-signers to the loan.

By far the most popular student loan program today, which accounts for more than ninety percent of government backed funding, is subsidized and unsubsidized Stafford loans. The most desirable are of course subsidized loans on which the government picks up the bill for interest payments while you are in college and for a grace period of up to six months after you graduate. These loans are however needs based and so there are a couple of hoops which you have to jump through to qualify. Unsubsidized loans in contrast are not needs based and so are available to almost all students.

For a graduate student however the picture is somewhat different and, while there are graduate scholarships and grants available, these tend to be few and far apart. It is however often possible to get a teaching or research assistantship, which is essentially a low paying, long hours job which many graduates avail themselves of to help them through their course or while carrying out research.

Another recently introduced option for graduates is a PLUS loan. PLUS stands for Parent Loans for Undergraduate Students and, as the name suggests, was originally designed to allow parents to take out a preferential loan in order to help a son or daughter through college. Now however this program has been extended to also allow graduate students to take a PLUS loan in their own right.

PLUS loans are readily available and are credit, rather than need, based. For some graduates this may cause a problem but the majority of graduates have not had time to get themselves into the credit problems which are suffered by so many adults today. Consequently, although you may have a sparse credit history, you probably will not have enough bad marks on your credit report to rule you ineligible for a PLUS loan.

The downside of PLUS loans is that, in historical terms at least, current interest rates which are generally either 7.9% or 8.5% are not low. This means that interest charges on even a relatively small loan can be high and repayment will need to start within 60 days of the grant of the loan, with no grace period.

As with all student loans, whether for undergraduates or graduates, there are a variety of different loans available from both government and private sources and, government loans in particular, have different caps for both single loans and lifetime loans from individual programs. As a result this is one area which you will need to research carefully, rather than simply rushing in and applying for the first loan which springs to mind.

As the cost of a college education has soared in recent years we take a look at funding your way through school as both an undergraduate and as a graduate student.

TheStudentLoansCenter.com provides information of a variety of topics including student PLUS loans and private low interest student loans

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