- The FAFSA is used to offer financial aid for graduate school as well as for undergraduate school.
- The interest rates on loans for graduate students are higher than those for undergraduate students.
- Graduate students can take out unsubsidized loans and Direct PLUS loans, but not subsidized loans.
- Read more of Insider's student loan coverage here.
If you applied for financial aid as an undergraduate student, you may already be familiar with the Free Application for Federal Student Aid. This form, commonly known as the FAFSA, is used to determine your eligibility for financial aid including grants, work-study, and loans. The FAFSA covers financial aid for graduate school as well as for undergraduate school.
Filing the FAFSA as a graduate student is similar to completing it as an undergraduate. You'll need tax returns, bank account information, and details on any investments. It will take you about 30 minutes to complete and you can select up to 10 schools to send your FAFSA to.
You can find a more in-depth look into how to apply for the FAFSA here.
How is graduate financial aid different from undergraduate aid?
Graduate students are considered independents, compared to most undergraduates who are considered dependents of their parents. Even if you're still living with your parents, you're thought of as an independent student if you're working toward a graduate or professional degree. This means you'll file the FAFSA using only your financial information, not your parents' information.
The interest rates on graduate loans are higher than on undergraduate loans. Unsubsidized loans for graduate students have a 5.28% interest rate, while undergraduate students get a 3.73% rate on both unsubsidized and subsidized loans.
Graduate students also aren't eligible for Pell Grants, which is gift aid given to undergraduate students who display significant financial need. Students who are earning their postbaccalaureate teacher certification are the exception to this rule and may sometimes qualify for a Pell Grant.
Graduate students may qualify for federal Fulbright Grants, Iraq and Afghanistan Service Grants, and the Teacher Education Assistance for College and Higher Education (TEACH) Grant. Grad students are also eligible for federal work-study, which is a program that provides part-time positions for students with financial need to earn money for academic expenses.
You might want to pay down the interest on the loans while you're in school to prevent it from capitalizing at the end of your grace period. Interest capitalizes when your outstanding interest is added to your loan principal at the end of a period of nonpayment.
What types of loans can graduate students take out?
Graduate students aren't able to take out subsidized loans like undergraduate students can, only unsubsidized loans and Direct PLUS Loans. Interest begins to accrue on these loans as soon as they are disbursed. Here's a quick breakdown on the two types of loans:
- Direct Unsubsidized Loans: Eligibility is not contingent on financial need. Interest will accrue on Direct Unsubsidized loans while you're in school, during your grace period, or during a period of deferment, but you won't be required to pay this interest until your repayment period begins. Graduate and professional students can borrow up to $20,500 in Direct Unsubsidized Loans per year.
- Direct PLUS Loans: You can get a Direct PLUS Loan to pay for expenses not covered by other financial aid offered by your school. These loans require a credit check. The interest rate for the 2021-22 school year is set at 6.28%, and the maximum loan amount is based on the cost of attendance minus any other financial aid you get.
You can take out more in loans as a graduate student than as an undergrad, which may make it easier to attend a more expensive school. That said, be careful with how much you borrow and make sure you have a plan in place to pay back your loans.
The financial aid process is very similar for graduate and undergraduate students. Both types of students are required to fill out the FAFSA to qualify for financial assistance, though undergrads are eligible for loan options with lower rates.