Ways to Qualify for a Graduate Loan

| January 2, 2012

Graduate students face tremendous financial burdens in pursuing their studies. Graduate school tuition is often exceedingly expensive. Grad students also face other financial burdens, such as the purchase of textbooks, laptop computers, and living expenses. Given these severe financial restraints, applying for loans is usually a necessity for many grad students.

The government offers a variety of student loans for grad students. One of the more popular loans that usually covers the cost of tuition is the DirectPLUS loan. The main condition for qualifying for this loan is that a person does not have adverse credit history. In addition, one must also complete the Free Application for Federal Student Aid (FAFSA). Also, one may only apply for a DirectPLUS loan after a school has determined one’s eligibility to receive other types of loans. These other types of loans are the subsidized and unsubsidized Stafford loans. The DirectPLUS loan has an interest rate of 7.9%.

Important changes have been made to the entities disbursing graduate school loans. Prior to 2010, private lenders were able to distribute the Direct Stafford loans, the Direct PLUS loans, and Direct Consolidation loans. However, now under the Direct Loan program, the U.S. Department of Education is responsible for disbursing educational loans for grad school.

Many students wonder how much money they are able to receive from the Direct PLUS loan. The Direct PLUS loan covers the entire cost of attendance for one to attend a law school. Subtracted from this figure is any other financial assistance that a person receives. Also, one will have 4% deducted from the Direct PLUS loan as a fee from the government.

Students also mistakenly believe that having a poor credit score will impact their ability to qualify for Direct PLUS loans. Credit score is not amongst the criteria for “adverse credit history,” however. Students that require a cosigner for a Direct PLUS loan have suffered from bankruptcy or wage garnishment. In addition, if one has a tax lien within the past 5 years, he or she can be denied a Direct PLUS loan. Repossession and voluntary surrender are two other forms of criteria that can disqualify a person from receiving a Direct PLUS loan. In addition, accounts that may be 90 or more days delinquent will suffice as “adverse credit history.” However, if delinquent accounts have occurred more than five years ago, then a student will not be considered to have “adverse credit history.”

Category: Student Loan

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