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Home College Loans Federal Student Loans Direct Loans Federal Student Loans for Graduate Students

Federal Graduate Student Loans

Summary: Federal loans are available for students attending graduate or professional school. Under the Direct Loans program, you can borrower two types of loans: the Direct Unsubsidized Loan and the Grad PLUS Loan. Compared to undergraduate loans, there are increased borrowing limits but there is no longer an interest subsidy. All federal loans for graduate or professional studies are unsubsidized.

student loan interest rates for May 2020

Types of Federal Loans for Graduate School

There are two types of federal loans for graduate and professional students: Direct Unsubsidized Loans and Grad PLUS Loans.

Direct Unsubsidized Loans, sometimes called Unsubsidized Stafford Loans, offer a fixed interest rate and flexible repayment terms. Demonstrated financial need is not required to qualify, but there are annual and aggregate loan limits.

Grad PLUS Loans (a specific type of Direct PLUS Loan) allow you to borrow beyond Direct Unsubsidized Loan limits. Like the Unsubsidized Loan, this is not a need-based loan but you must pass a credit check to qualify. For both Direct Unsubsidized Loans and Grad PLUS Loans, students are responsible for paying all of the interest from the time of disbursement until the loan balance is paid off.

Federal Loan Limits for Graduate School

For Grad PLUS Loans, the annual loan limit is your total cost of attendance (COA) minus any other financial aid you may be receiving. There are no aggregate (cumulative) loan limits for this program.

For Direct Unsubsidized (Stafford) Loans, there are specific annual and aggregate loan limits. Students attending graduate school or professional school can borrow up to $20,500 per year in Direct Unsubsidized Loans. The aggregate loan limit is $138,500, including undergraduate debt (and no more than $65,500 in Direct Subsidized Loans).

Medical school and health professions students may borrow up to $40,500 per year and have an aggregate loan limit of up to $224,000. (Learn more about the borrowing limits for various medical fields of study.)

Direct Unsubsidized Loans for Graduate Students — Borrowing Limits

graduate and professional student annual loan limit

health professional student annual loan limit

aggregate cumulative student loan limits

Students attending graduate school or professional school who have exhausted eligibility for the Direct Unsubsidized Loan can take out a Grad PLUS Loan, another low-cost, fixed-rate federal student loan.

Unsubsidized Loan Interest Rates

The interest rates on Direct Unsubsidized Loans for graduate and professional students are fixed and do not change over the life of the loan. The interest rate for the 2020-2021 academic year is 4.30%. This is less expensive than the 5.30% interest rate on Grad PLUS Loans.

The interest on a Direct Unsubsidized Loan starts to add up (accrue) from the date the loan is first disbursed. If you don’t pay the interest as it accrues, it will be capitalized (added to the principal balance), increasing the total size of the loan.

Unsubsidized Loan Origination Fee

The current fee on the Direct Unsubsidized Loan for graduate students is 1.057% for loans first disbursed on Oct. 1, 2020 through Sept. 30, 2021. This is less expensive than the 4.228% fee on Grad PLUS Loans.

How Fees Affect the Total Loan Costs

Loan fees are basically a form of up-front interest. For example, if your loan has a 10-year repayment term, a 4% fee is about the same as an increase of about .875% to 1% in the interest rate. If your loan has a 30-year repayment term, a 4% fee is the same as an increase of about .334% to .5% in the interest rate.

Comparison of Federal Student Loans for Graduate Students

comparison of federal student loans for graduate students
Direct Unsubsidized Loan Grad PLUS Loan*
 4.30% fixed interest rate 5.30% fixed interest rate
 1.057% fee 4.228% fee
Demonstrated financial need not required Demonstrated financial need not required
 Annual borrowing limit: $20,500 ($40.500 for medical students) Annual borrowing limit: Cost of Attendance (COA) minus other financial aid received
 You are responsible for paying all interest You are responsible for paying all interest

*Private student loans are also an option and may have more competitive (i.e., lower) interest rates. Most private student loan lenders even offer zero origination fees.

Sallie Mae student loans offer competitive fixed and variable rates for undergraduates, graduate students and parents. Learn More

How to Apply for a Direct Unsubsidized Loan for Graduate School

You need to file the Free Application for Federal Student Aid (FAFSA®) before you can take out federal student loans from the Direct Loans program.

  1. Complete the FAFSA or Renewal FAFSA (for returning students) at
  2. Receive a financial aid award letter by mail or email from your school's financial aid office. This letter will summarize your available financial aid.
  3. Contact your school’s financial aid office to accept the financial aid and student loans.
  4. Sign any associated paperwork such as the Master Promissory Note (MPN).

Graduate School Direct Unsubsidized Loan Eligibility

Direct Unsubsidized Loans are available to students attending graduate school and professional school.

Degree programs and common examples:

  • Masters: M.A., M.S.
  • Doctorate: Ph.D., Ed.D.
  • Business: M.B.A.
  • Law: LL.M., J.D., S.J.D.
  • Medical: M.D., D.O.
  • Dental: D.M.D., D.D.S.
  • Nursing: M.S.N., D.N.P.
  • Veterinary medicine: D.V.M.

Loan eligibility and the loan limits are not based on demonstrated financial need.

How to Apply for a Grad PLUS Loan

Check out our comprehensive article on understanding and applying for Grad PLUS Loans. In a nutshell, when you file the FAFSA® the school will outline your eligibility for the Grad PLUS Loan and you will need to complete a separate Direct PLUS Loan Application on the Federal Student Aid website.

  • Interest Rates
    • Fixed as low as: 4.25% APR1
    • Variable as low as: 1.25% APR1
  • Interest Rates
    • Fixed as low as: 3.49% APR1
    • Variable as low as: 1.09% APR1
  • Interest Rates
    • Fixed: 4.24% APR - 12.99% APR3
    • Variable: 1.24% APR - 11.99% APR3

How Are Student Loans Disbursed?

The U.S. Department of Education sends the Direct Loan funds to your school to be credited to your account. In most cases, the loan will be disbursed in at least two installments.

Loan funds are credited to your account in this order:

  1. Tuition and fees
  2. Room and board (if you are living in college-owned student housing)
  3. Other school charges (with your permission)

If any loan funds remain in your account, the credit balance will be refunded to you by check, cash, debit card, or electronic funds transfer (EFT) to your bank account. Remember, the refund must be used to pay for your education expenses, such as textbooks, supplies, and equipment.

In-School Deferment and Grace Period

While you are enrolled in school at least half-time, your Direct Loan will be placed into deferment, which means you don’t have to make any payments although you are encouraged to do so, if possible. In addition, you don’t have to make payments during the 6-month grace period after you graduate or drop below half-time enrollment status.

Just remember that interest on your loan will start to accrue (add up) as soon as loan funds are sent to your school. Any unpaid interest on your loan that has accumulated during school and during your grace period, will be added to your principal balance at the start of repayment.


The standard repayment term on Direct Loans is 10 years. However, you can qualify for a longer repayment term if you consolidate the loans or have more than $30,000 in federal student loans with a single lender.

Graduate students who borrow Direct Unsubsidized Loans are generally eligible for all of the different repayment plans offered by the U.S. Department of Education.

Eligible Repayment Plans


  1. File the FAFSA every year to maintain eligibility for student aid.
  2. Take out the maximum amount of Direct Unsubsidized Loans before considering a Grad PLUS Loan.
  3. Compare the costs and benefits of Grad PLUS Loans and private student loans. If you have excellent credit or a strong cosigner, you may get a lower interest rate with a private student loan.
  4. If you are denied for a Grad PLUS Loan due to an adverse credit history, find a cosigner (also called an endorser) and reapply.
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