What are Student Loan Fees and How Do They Work?
Next, it’s worth explaining the fees borrowers can expect with federal student loans. Student loan fees for federal loans are also called “origination fees.” This is money you pay to a lender for processing the loan application. Instead of a flat price, these origination fees are commonly a percentage of the total amount of your loan. An origination fee for a new borrower may fall somewhere around one percent of the total value of the loan, but it’s important to check with your lender or institution first.
You also need to remember there is a total limit on the amount grad students can borrow in federal student loans. This is also known as your aggregate loan limit. For grad students, the current aggregate limit is set at $138,500. However, keep in mind that this limit also includes any Stafford Loans a student may have taken out as an undergraduate.
Direct PLUS Loans
Direct PLUS loans are graduate student loans specifically designed for use by grad students. Like Stafford Loans, Direct PLUS Loans (also known as grad PLUS loans) are also operated by the federal government. However, there are some key differences between a Direct PLUS Loan and a Stafford Loan. Graduate PLUS Loans often have higher interest rates.
Like Stafford Loans, there are origination fees associated with Direct PLUS Loans that can be as high as four percent of the total loan amount. Make sure you consult with your school or check with the Department of Education for the most up-to-date numbers.
That said, there’s also a benefit to Graduate PLUS Loans in that, unlike Stafford Loans, there’s no aggregate limit to how much you can borrow. That is to say, there is no limit up to the cost of attendance laid out by your university, minus any other financial aid you may have received.
NC Assist Student Loans
Other money sources for grad students are alternative or private graduate student loans. The NC Assist Loan is a student loan provided by the North Carolina state-based nonprofit lender, College Foundation, Inc. Because the loan is serviced by a trusted nonprofit, students will receive more competitive interest rates than those with many private loans. In fact, interest rates for NC Assist Loans are often lower than Direct PLUS rates. Furthermore, there are no fees associated with NC Assist Loans.
One big advantage many graduate students have, that many undergrads don’t, is that they have had more time to develop a credit history. This can make a big difference when applying for student loans. It may mean that a grad student could have the type of credit score necessary to qualify for student loans with the most competitive interest rates. It can be an effective solution for grad students to find the money they need while also saving in the long run.
Are you or someone you know a graduate student looking to bridge the gap between financial aid and the cost of attendance? Learn more about your options for a competitive loan with no fees from NC Assist. Learn more about how North Carolina student loans can help you find the money you need for graduate school.
The principal is the total amount of your loan. When interest capitalizes and gets added onto your principal, it increases the total amount you’re borrowing plus interest. Example: If you initially borrow $20,000 and don’t pay the interest on the loan while in school, the interest gets added onto the $20,000 as the new loan total. Say the interest was five thousand dollars. Now, instead of the principal amount you borrowed being $20,000, the interest is added to hike the amount you borrowed to $25,000. You’d have to pay back the $25,000 PLUS the interest on this amount. It all adds up for sure.