Unsubsidized Loan vs Grad PLUS: Understanding Your Graduate School Financing Options

#### Unsubsidized Loan vs Grad PLUSWhen considering financing options for graduate school, students often find themselves weighing the benefits and drawback……

#### Unsubsidized Loan vs Grad PLUS

When considering financing options for graduate school, students often find themselves weighing the benefits and drawbacks of different types of loans. Two popular choices are the **unsubsidized loan** and the **Grad PLUS loan**. Understanding the differences between these two options can help you make an informed decision about which loan is best suited for your financial situation.

#### What is an Unsubsidized Loan?

An **unsubsidized loan** is a type of federal student loan that is available to graduate and professional students. Unlike subsidized loans, where the government pays the interest while the student is in school, interest on unsubsidized loans begins accruing as soon as the loan is disbursed. This means that while you are in school, you are responsible for the interest, which can add up significantly over time.

One of the major benefits of unsubsidized loans is that they do not require a demonstration of financial need, making them accessible to a wider range of students. The maximum amount you can borrow in unsubsidized loans varies depending on your degree program and year in school, but it typically ranges from $20,500 to $41,000 per academic year for graduate students. Additionally, the interest rates for unsubsidized loans are generally lower than private loans, making them a more affordable option for many borrowers.

#### What is a Grad PLUS Loan?

The **Grad PLUS loan** is another federal loan option specifically designed for graduate and professional students. Unlike unsubsidized loans, Grad PLUS loans require a credit check, and borrowers must not have an adverse credit history. This means that if you have a history of defaulting on loans or have significant negative marks on your credit report, you may not qualify for a Grad PLUS loan.

A key feature of the Grad PLUS loan is that it allows you to borrow up to the total cost of attendance at your school, minus any other financial aid you receive. This can be particularly beneficial for students attending expensive programs or those who need to cover significant living expenses. The interest rates for Grad PLUS loans are typically higher than those for unsubsidized loans, but they still offer competitive rates compared to private loans.

#### Comparing Unsubsidized Loans and Grad PLUS Loans

When deciding between an **unsubsidized loan vs Grad PLUS**, there are several factors to consider:

1. **Interest Rates**: Unsubsidized loans generally have lower interest rates compared to Grad PLUS loans. This can make unsubsidized loans more appealing if you are looking to minimize your overall borrowing costs.

2. **Credit Requirements**: Unsubsidized loans do not require a credit check, while Grad PLUS loans do. If you have concerns about your credit history, you may find it easier to qualify for an unsubsidized loan.

3. **Loan Limits**: Unsubsidized loans have annual borrowing limits, while Grad PLUS loans allow you to borrow up to the total cost of attendance. If you need to borrow a larger amount, Grad PLUS loans may be the better option.

4. **Repayment Options**: Both loan types offer various repayment plans, including income-driven repayment options. However, Grad PLUS loans may have additional benefits, such as the possibility of loan forgiveness for certain public service jobs.

#### Conclusion

Ultimately, the choice between an **unsubsidized loan vs Grad PLUS** will depend on your individual financial situation, credit history, and borrowing needs. It is essential to carefully evaluate both options and consider factors such as interest rates, repayment terms, and eligibility requirements. By doing so, you can choose the financing option that best aligns with your goals and helps you achieve your educational aspirations without overwhelming debt.