Best Student Loans for Graduate School of July 2026
New Federal Law Means More Grad Students Will Need Private Student Loans
With the passage of the One Big Beautiful Bill Act, major changes are coming to the federal student loan program on July 1, 2026. They include limits on the amount of money graduate students can borrow from the government. The tighter borrowing caps could see borrowers turning to private loans to fill the gap.
The government is phasing out its Grad PLUS loan program, which had allowed students to borrow up to the total cost of attendance. Graduate students will still be able to take out federal loans, but there will be new caps. Most students will be capped at $20,500 per year and $100,000 in total, while students in professional programs such as law or medical school face limits of $50,000 per year and $200,000 lifetime. Total graduate school costs can reach into the hundreds of thousands.
Existing Grad PLUS borrowers will be able to receive the previous terms until they complete their programs.
Here are some important factors to compare as you shop around for the best loan for graduate school:
- Interest rate. The lower the rate, the greater your savings over the loan term. A low rate can help you secure a low monthly loan payment, pay off a loan faster and save on total interest paid.
- Loan amount. Check loan minimums and maximums. Some private lenders may allow you to borrow up to your school’s cost of attendance. Others may have lower limits. Will a single loan cover all of your needs?
- Repayment terms. Private student loans may have repayment terms of five to 20 years. Look at the number of repayment choices and their flexibility. Keep in mind that many lenders offer lower interest rates to borrowers who choose shorter terms. Federal loans come with access to several repayment options, including an income-based plan.
- Fees. Does the loan have origination fees or other charges that will raise your cost of borrowing? Could you face late or missed payment fees?
- Discounts. Private lenders may offer rate discounts for automatic payments or relationship discounts to eligible customers. You might qualify for additional discounts, such as a one-time cash reward for getting a good GPA.
- Loan types. What types of loans can you get from this lender? Do you meet the lender’s requirements?
- Cosigner requirements. You may need a cosigner to qualify for a private loan. What are the minimum credit score and income requirements for cosigners? How long do you have to wait to release a cosigner from the loan?
The application process for graduate loans depends on whether you’re applying for federal or private student loans.
Graduate students “can generally avoid having to go through the verification process that some undergraduates must complete because they are receiving only non-need-based loans,” says James Anderson, former director of financial aid at Montclair State University.
Direct unsubsidized loans are federal loans for eligible undergraduate, graduate and professional students, with yearly and lifetime caps. reserved for graduate students and parents of undergraduates. The interest rate for a Direct Unsubsidized Loan for a graduate student is 8.07% for the 2026-27 school year.
With private loans, you’ll submit an application directly with the lender of your choice. Before you do this, get prequalified with multiple lenders to see your estimated rate, compare offers and choose the best fit for you. Prequalification typically uses just a soft credit check, which doesn’t hurt your credit score.
Regardless of where you apply, you’ll typically need to provide some personal information, income and employment information, your school name and other relevant details.
Graduate student loan limits can vary by lender and type of student loan. The direct unsubsidized loan caps are $20,500 per year and $100,000 in total for most students, while students in professional programs such as law or medical school have limits of $50,000 per year and $200,000 lifetime.
If you’re thinking of getting private student loans, check with each lender to find out how much you can borrow. Note that private lenders may also have annual and lifetime limits.
To find out how much you might be paying per month on your graduate student loan, use a loan calculator. The average student loan payment is between $200 and $299, according to data from the Federal Reserve.
If you’re applying for federal graduate student loans, no minimum credit score is required. In fact, if you apply for direct unsubsidized loans, no credit check is involved in the application process.
With private student loans, the credit score requirements can vary by lender. In general, most lenders expect a score in the high 600s to qualify. If your credit score isn’t where it needs to be, or you do qualify but the terms aren’t favorable, a creditworthy cosigner can boost your odds of getting a loan with affordable terms.
- Scholarships: Check nonprofits, educational institutions and professional associations. Try Fastweb, an extensive scholarship search platform, and Sallie Mae’s interactive tool to find grad school scholarships. But also fill out the FAFSA, which will determine whether you are eligible for need-based scholarships from your school or state.
- Federal work-study programs: Students earn money for school through part- or full-time campus jobs. Fill out the FAFSA to qualify.
- Grants: Complete the FAFSA to be considered for grad school grants. For school-specific grants, check with your school’s financial aid office. You may find grants from nonprofits, government organizations, professional groups and others, but also ask your department head or adviser.
- Employer sponsorship: Some employers offer tuition reimbursement as a benefit, paying for all or part of your education costs. You might have to commit to staying at the company for a certain amount of time after reimbursement.
- Income-share agreement: You receive money to fund your education, and the ISA will take a cut of your income after you graduate.
Graduate student loans work similarly to undergraduate student loans, with only a few key differences. For starters, graduate federal loans typically have higher limits, which help students get the financing they need and make up for fewer other financial aid options.
However, these loans also charge higher interest rates than undergraduate loans. For federal student loans disbursed before July 1, 2026, interest rates are 6.39% for undergraduates and 7.94% for grad students.
Federal student loans may be subsidized or unsubsidized, but all graduate loans are unsubsidized.
Graduate student loans from private lenders may have higher interest rates than undergraduate loans from the same lenders.
However, lenders typically offer a range of rates based on your creditworthiness. If you’ve managed to build a credit history by the time you’re a graduate student, you may qualify for a lower rate than what you could’ve gotten on your own as an undergrad.
There are both benefits and drawbacks to using graduate student loans to help fund your education. An August 2025 U.S. News survey found many current students were considering changing their education plans as a result of the One Big Beautiful Bill Act passing and the coming federal student loan changes. As with any financial decision, it’s important to consider the pros and the cons before you pull the trigger:
- Loans can help you afford a graduate or professional degree.
- You don’t need to make payments until after you leave school.
- Loan money can be used to cover educational and living expenses.
- Graduate loans carry higher interest rates than undergraduate loans.
- Graduates are not guaranteed jobs to pay back their debt.
- Student loan payments can delay other important financial goals.
If you choose to borrow, know that borrowing as a graduate student is somewhat different than borrowing as an undergraduate. The federal direct loan borrowing limit is higher for graduate students, and interest rates are also higher. In addition, you may have a stronger credit history as a graduate student, which means you may be able to get lower rates from lenders outside the federal loan program and save money over time.
Private loan lenders are beginning to roll out specialized loan products for certain professions. For example, some medical school loans give you the option to defer payment during residency. It’s important to understand the nuances of your degree. Learn more about some of them here:
