Whether you’re in it for the career opportunities or just the pursuit of knowledge, a master’s degree can open doors. Still, you need a way to cover the costs of a master’s degree, which is easier said than done.
Many loan programs only apply to undergrads, so you’ll need to learn everything you can about student loans for master’s degree programs. In this blog, we’ll break down your loan options for grad school, how applying and eligibility work, and what to expect during the repayment process.
What Are the Best Student Loan Options for a Master’s Degree?
If you’re comparing student loans for master’s degree programs, it helps to think in tiers. Not all borrowing options work the same way, and some are safer starting points than others. In general, experts recommend a borrowing hierarchy like this:
1. Direct Unsubsidized
Federal direct unsubsidized loans are usually the first option to consider for funding grad school. These are government-backed loans for master’s degree programs, and they usually offer more protections than private loans.
There are a few important things to know here:
- You don’t need to show financial need.
- The interest rate is fixed, so it stays the same for the life of the loan.
- You may get access to federal debt relief help, like deferment or forbearance.
Many borrowers choose this option because it’s predictable and offers some extra protections.
2. Grad PLUS Loans
Grad PLUS Loans used to be a common way for graduate students to cover costs that direct unsubsidized loans did not cover. But under the OBBB, Grad PLUS Loans are being discontinued for new borrowers starting July 1, 2026.
Some current borrowers may still have access for a limited time under transition rules. This may apply if they borrowed before the cutoff and stay in the same program. Because these rules can depend on timing and enrollment status, check with your school’s financial aid office before making a borrowing plan.
Again, OBBB makes this whole situation different beginning July 1, 2026 there will be no new Grad PLUS Loans issued or available. This may drastically change many graduate and professional students budgets, plans, and timelines for graduation.
Grad PLUS Loans used to be a common way for graduate students to cover costs that direct unsubsidized loans did not cover. But under the OBBB, Grad PLUS Loans are being discontinued for new borrowers starting July 1, 2026.
Some current borrowers may still have access for a limited time under transition rules. This may apply if they borrowed before the cutoff and stay in the same program. Because these rules can depend on timing and enrollment status, check with your school’s financial aid office before making a borrowing plan.
3. Private Loans
You get private student loans from banks, credit unions, or online lenders instead of the federal government. The downside is that you’re at risk of variable interest rates and get fewer repayment options.
Still, private loans could make sense if you:
- Already maxed out your federal options
- Qualify with a lower rate thanks to a strong credit score (or a cosigner)
- Know you’ll be able to repay it on time in the future
The Ins and Outs of Master’s Degree Student Loan Eligibility and Applications
If you’re looking into student loans for master’s degree programs, the application process can feel overwhelming. Here are a few tips to speed up the process.
Start With FAFSA
If you want federal master’s student loans, you need to fill out the Free Application for Federal Student Aid (FAFSA). This is the form schools use to determine your eligibility for federal loans.
Check Your Federal Loan Eligibility
Your main options for federal loans are direct unsubsidized and Grad PLUS. But you still need to meet some requirements to qualify for these loans.
Always check the loan’s website for the most recent requirements. But generally speaking, eligibility usually requires:
- Being enrolled in an eligible graduate or professional program
- Completing the FAFSA
- Maintaining at least half-time enrollment (for some loans)
Plan for Credit Checks
Not all student loans for masters program costs work the same way. Direct unsubsidized loans generally don’t require a credit check. Grad PLUS Loans do, and so do most private loans.
This won’t be a big deal if you already have strong credit. But if you don’t, you may need to get a cosigner to increase your chances of approval.
Gather Your Documents
The exact paperwork varies by school and lender, but you’ll probably need:
- FAFSA
- School and program details
- Proof of identity
- Financial aid offer from the school, if available
- For private loans, income or credit information, and possibly cosigner information
How Repaying Master’s Student Loans Works
Taking out a loan is no cakewalk, but that’s just the beginning. The real challenge comes when it’s time to repay your student loans for a master’s degree. Here’s how repayment usually shakes out.
Understand Interest Rates
With federal master’s student loans, interest adds up daily on unsubsidized and Grad PLUS loans. There are no grace periods here, unfortunately. Federal student loans for 2025–26 currently carry fixed rates of 7.94% for direct unsubsidized graduate loans and 8.94% for Grad PLUS loans.
Calculate Your Monthly Payment
If you repay a federal master’s degree student loan on the standard 10-year plan, here’s what that will roughly look like (based on current interest rates).
For a direct unsubsidized loan at a 7.94% interest rate, a $20,000 loan will cost you around $242 a month. A Grad PLUS Loan with a 8.94% interest rate for the same amount would cost you $253 a month.
Keep in mind that your actual payment could be different. Income-driven repayment plans and borrowing across multiple years with different interest rates will affect your monthly payment.
Keep Deferment and Forbearance in Your Back Pocket
If you hit a rough patch, federal borrowers may be able to use deferment or forbearance. Both can temporarily postpone or reduce payments.
The downside is that interest continues to accrue, even if your loans are on pause. So, deferment and forbearance can be helpful in an emergency, but they aren’t a great long-term plan because they can seriously inflate your loan balance.
How Can You Reduce Borrowing?
If you’re looking at student loans for master’s degree programs and feeling a little queasy about the total, we get it. Here are a few options that could reduce your master’s degree student loans:
- Free money: Always look for “free money” first in the form of grants or scholarships. Scholarships are money your school awards you that you don’t have to pay back, while grants are also free, but usually based on financial need.
- Assistantships: A graduate assistantship usually means you work for the school in exchange for compensation. That compensation may include a stipend, tuition help, or both.
- Employer assistance: Are you earning a degree while working? It can’t hurt to ask your employer if they offer tuition assistance or reimbursements.
Know Before You Borrow
Paying for grad school can feel like a lot, because, well, it is a lot. But the best path usually isn’t to grab the biggest loan you can find and hope for the best. Even if you need to take out multiple loans, start with federal options with the most protections before going to private loans. As always, it helps to take on debt mindfully and try to reduce your burden through scholarships, grants, or assistance programs.
